Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — Energy Policy

Mr. D. E. Thomas: asked the Secretary of State for Wales if he has made any assessment of the effects of Government energy policy on employment prospects in Wales.

The Secretary of State for Wales (Mr. Nicholas Edwards): Our policy of providing competitive and secure supplies of energy is essential for the best development of manufacturing industry and of employment prospects in Wales.

Mr. Thomas: Does the Secretary of State now agree with the view expressed by his right hon. Friend the Chancellor of the Exchequer at the beginning of the coal industry dispute, which was engineered by the Government, that the dispute was a good investment? How does the absence of a coherent energy policy and of substantial investment in the Welsh coal industry amount to an energy policy that is good for Wales?

Mr. Edwards: I cannot agree with the hon. Gentleman about the absence of a coherent energy policy. Massive investment is going on in the coal industry. We are determined to see that alternative sources of energy are available to industry so that they have competitive fuel sources to enable them to compete with other countries.

Sir Raymond Gower: As the most damaging factor affecting energy in Wales was the unfortunate coal mining

strike, to what extent will that affect the prices of electricity in particular and energy in general during the period immediately ahead of us?

Mr. Edwards: My right hon. Friend the Chancellor has already made clear the way in which those costs are being met. They will have no immediate impact on the electricity generating industry, although undoubtedly they represent a burden on the economy.

Mr. Foot: Does the right hon. Gentleman recall that during the miners' strike the churches in Wales produced what the Prime Minister would no doubt describe as a whole nest of cuckoos? Would it not have been right to pay more attention to that rare ornithological development? Why did he not seek to settle on such a fair proposition? Would it not have been better for Wales and the whole country?

Mr. Edwards: I am afraid that the churches were unable to put forward a basis that held out any hope of a realistic settlement at a time when the leader of the NUM was not prepared, as he said, to give an inch.

Mr. Ron Davies: May I remind the Secretary of State of the devastating impact that the proposed closure of Bedwas colliery will have on the Rhymney valley when we already have 10,000 unemployed and now face a further loss of 600-plus jobs? Is he aware that that closure was effected by underhand means by the NCB in Wales? Is he aware of the statement by the Secretary of State for Energy some months ago that the modified colliery review procedure was sacrosanct? Will the right hon. Gentleman confirm that that is Government policy and take steps to ensure that before any final decision is taken in respect of Bedwas that colliery is subject to the modified review procedure as agreed with the National Association of Colliery Overmen, Deputies and Shotfirers?

Mr. Edwards: I understand that faces were lost at that colliery during the dispute, that those who work in the colliery have now voted on the issue, and that that is a question for the management of the NCB.

Mr. Terlezki: Does my right hon. Friend agree that the NCB in Wales has lost coal exports to France to the tune of 600,000 tonnes per annum, which is bound to tell on


the Welsh economy and, in particular, on Welsh coal before output is brought to normality and the Welsh economy is stabilised?

Mr. Edwards: I am glad to say that production in the coalfield is already getting back to normal. I heard last week from the chairmen of the NCB and of Associated British Ports that exports have already begun to flow through the south Wales ports. That is obviously an encouraging development and I hope that everyone will work to restore those important markets.

Mr. Barry Jones: It is said that NCB (Enterprise) Ltd. is to be funded with £10 million. What share of that £10 million will Wales have? Does the Secretary of State realise that that £10 million—indeed more than that—could easily be spent in Wales? How much has he won for NCB (Enterprise) Ltd. in Wales?

Mr. Edwards: It has been made clear that these are start-up resources to enable the operation to get off the ground. I understand that a high proportion of the proposals so far made involve Wales. At present there is no inhibition on the company's work arising from a shortage of funds.

Oral Answers to Questions — A55 Northop Bypass

Mr. Raffan: asked the Secretary of State for Wales if he will make a statement on the proposed A55 Northop bypass, giving a schedule of starting and completion dates for its construction.

The Minister of State, Welsh Office (Mr. John Stradling Thomas): I announced my decision on a route for the Northop bypass on 14 March. I have accepted the inspector's recommendation that the route in the published draft order to the north and east of the village should be adopted, though my Department will be discussing questions of access and severed land with the landowners affected. The provisional start date for the scheme is summer 1987, subject to the completion of the remaining statutory procedures and of engineering design. Construction work is expected to take about two years.

Mr. Raffan: Why has the bypass starting date slipped from autumn 1986 to summer 1987? Does my hon. Friend remember his assurance to me on 25 October 1984 that the delay in announcing the outcome of the inquiry would not lead to a delay in the starting date? Does he realise that if this new starting date is followed there will be a period of more than two years when Northop village will be nothing more than a bottleneck between the completed Hawarden and Holywell bypasses?

Mr. Stradling Thomas: I understand my hon. Friend's concern, but careful consideration had to be given to the issues involved. As the report made clear, the inspector found that some of the matters raised at the public inquiry required careful balancing. The provisional start date of summer 1987 accords with the time scale given in "Roads in Wales 1983". The statutory procedures, and the considerations of those of my hon. Friend's constituents who are affected, cannot easily be brushed aside.

Mr. Roy Hughes: Does the Minister agree that since the publication of the document "Roads in Wales 1983" there has been a good deal of slippage in respect of the A55 programme? Is it not a pretty lame excuse for the Welsh Office to talk about changing priorities and competing

demands? Is it not obvious that such important road construction work should be given the highest possible priority?

Mr. Stradling Thomas: Such work is, of course, given the highest possible priority. Those who understand the engineering problems involved—and there are many hon. Members who do — will realise that slippage is inevitable in some schemes—

Mr. Roy Hughes: Too many banana skins.

Mr. Stradling Thomas: I thought that we were talking about roads rather than fruit. The hon. Gentleman made a statement that was grossly distorted. Some slippage occurs inevitably because of the difficulties involved, and because of the essential nature of the statutory procedures that protect the rights of those affected.

Oral Answers to Questions — A465 (Glynneath-Aberdulais)

Mr. Coleman: asked the Secretary of State for Wales if he will indicate the latest position in respect of the construction of the section of the A465 trunk road linking Glynneath with Aberdulais; and if he will make a statement.

Mr. Stradling Thomas: I am pleased to be able to tell the hon. Gentleman that I have decided to replace the existing A465 between Glynneath and Aberdulais with a dual carriageway along the previously announced route. Preparation of the scheme will now proceed and draft line, side roads and compulsory purchase orders will be published in due course.

Mr. Coleman: I am grateful to the Minister for that information, and I thank the Secretary of State for taking note of the representations that were made to him 12 months ago. That road has been the cause of great concern, because there is a mounting toll of lost lives. On behalf of my constituents, may I say how much I appreciate the decision announced this afternoon?

Mr. Stradling Thomas: I thank the hon. Gentleman.

Oral Answers to Questions — Labour Statistics

Mr. Barry Jones: asked the Secretary of State for Wales what is the number of people currently unemployed in Wales; how many were unemployed in May 1979; and what is the percentage increase in unemployment in Wales since May 1979.

Mr. Nicholas Edwards: On 14 February 1985 there were 183,806 unemployed claimants in Wales. In May 1979 the estimated equivalent figure was 77,200, an increase of 138·1 per cent.

Mr. Jones: After six years the right hon. Gentleman can only tell us these unpleasant figures. Does he agree that the Budget offers few hopes of new jobs? What has he done to safeguard the future of Llanwern as a viable, integrated steelworks against a background of laggardly continental reorganisation? Does he agree that the Shotton works is also a miracle of efficiency and productivity, but that thousands of ex-steelworkers on Deeside still beg for work in a place where vacancies total only 300 and the jobless 13,000? When will the Sharp factory open, and when will the Shotton paper mill be on stream?

Mr. Edwards: Both those major new job-creating projects in the hon. Gentleman's area of Wales will be


starting on time. They are a sign of the scale of the new investment that is taking place. I agree that the Shotton steelworks is doing extremely well and I believe that Llanwern has guaranteed its future by its performance.

Mr. Gwilym Jones: Would it not be refreshing, and even fantastic, if there were a positive approach from the Opposition Benches on this matter? Does my right hon. Friend welcome the coming together of HTV and the Western Mail for the Welsh national business awards scheme? Did my right hon. Friend welcome the comment by the assistant controller of HTV about the need to inform the people of the many real achievements by industry in Wales?

Mr. Edwards: What the controller said is undoubtedly true. I am sure that everyone with an interest in the industrial future of Wales will take every opportunity to congratulate industry on its good performance and will take pleasure in the announcement of the large-scale new investment that we are securing.

Mr. John: How many of the 183,000 have been unemployed for over a year?

Mr. Edwards: If the hon. Gentleman tables a question, I shall give him an immediate answer.

Mr. Raffan: Does my right hon. Friend agree that if the concern expressed by the hon. Member for Alyn and Deeside (Mr. Jones) is to be taken seriously he must have the Welsh economic plan which he pulled out of a hat on 21 October last year independently costed and tell us where on Welsh earth he will find the money to pay for it?

Mr. Edwards: I apologise to the hon. Member for Pontypridd (Mr. John) for not having immediately in front of me the figure he seeks. I accept that it is too high, and I am willing to answer a question about it. One of the most significant facts about the economic plan presented by the hon. Member for Alyn and Deeside (Mr. Jones) is that much of it has already been implemented by the Government.

Mr. Anderson: Does the Secretary of State recall that each year since 1979, as he has initiated deflationary policies and refused capital investment, he has claimed that we were turning corners, that things were getting better and that the academics at Bangor and elsewhere were alarmist? As the jobless figures continue to climb, why should we have any faith in his pronouncements?

Mr. Edwards: It is nonsense to talk of deflationary policies when clearly there is an increase in demand. My Department has carried out massive investment progammes on roads, factories and hospitals, and on infrastructure generally.

Mr. Terlezki: Does the Secretary of State agree that because of the Budget the WDA, WINvest and overseas companies are bound to expand, and to encourage and create more employment in Wales?

Mr. Edwards: One of the most important aspects of the Budget is the announcement of the dramatic expansion of the youth training scheme and the investment that that involves for the future of training provision. That is only one of our many measures to deal with the current problems.

Mr. Gareth Wardell: In response to the appalling record of increasing unemployment, will the Secretary of State give an assurance that he will resist any attempt by the Government, by the abolition of the wages councils, to cut the wages of the poorest who are employed? Will the right hon. Gentleman assure the House that instead of tinkering with the unemployment problem in that way he will accept that the real need is for a massive redistribution of wealth and income, and will he implement that policy in the near future?

Mr. Edwards: We have issued a consultative paper on the wages councils in which the arguments are set out fully. We should now proceed with the consultation process. I hope that the hon. Gentleman welcomes the measures that were announced in the Budget to lower the cost of employing those on lower wages, because that will help in providing jobs for them.

Mrs. Clwyd: Is the Secretary of State aware that the Cynon Valley is again top of the league table for male unemployment? Is he further aware that five men lost their jobs there last week, on the say-so of one man — Mr. Ian MacGregor? Two of those men were not even present when the so-called incident occurred. Will he intervene to reinstate those five men?

Mr. Edwards: I shall not intervene in what must be management decisions for the National Coal Board.

Oral Answers to Questions — Private Schools

Mr. Ron Davies: asked the Secretary of State for Wales how many private schools received public funds in Wales in 1984.

Mr. Stradling Thomas: In 1984, eight independent schools in Wales were reimbursed for remitted fees under the assisted places scheme and one received a grant under the direct grant scheme. Some schools will have received payments from boarding school allowances paid to some members of the armed, diplomatic and civil services or from local authorities in respect of children assisted by them.

Mr. Davies: Will the Minister confirm that £80,000 was paid to New College, Cardiff under the 1982 Industrial Development Act?

Mr. Stradling Thomas: No, Sir. New College, Cardiff is an independent establishment of further education and not an independent school. The £80,000 has not yet been paid, as it was only an offer of a job creation grant.

Dr. Marek: Does the Minister realise that at a time when the country is facing economic ruin his Department is continuing to pay out vast sums to maintain the private education sector? Does he agree that those vast sums are not needed by those who receive them, but have the effect merely of maintaining their privileges? Will he give the House, or make available in the Library, a complete breakdown of how much public money is given to the private education system in Wales?

Mr. Stradling Thomas: In the current academic year under the scheme 44 per cent. of pupils have a free place, and only 17 per cent. of families have an annual income in excess of £10,000. It should be borne in mind that fee remission is, broadly speaking, related to the gross income of the family, which in the case of two-parent families


would include the earnings of both the husband and wife if they are working. I do not think that there can be any argument about the fact that the scheme is helping mainly the less-well-off families, in contradiction of the hon. Gentleman's assertion.

Mr. Barry Jones: Have not Welsh Office Ministers sanctioned £2·2 million for the public schools sector between 1983 and 1986, including an estimated £1·1 million for 1985–86? Is the Minister aware that the Clwyd education authority has cut the capitation allowance to its primary schools by 10 per cent. and to its secondary schools by 5 per cent.? How does the Minister justify that odd policy when Her Majesty's Inspectorate has emphasised the serious impact of expenditure cuts on our state schools?
The Minister is a public schoolboy from Rugby, the Secretary of State from Westminster and the hon. Member for Conwy (Mr. Roberts) from Harrow. They are favouring their own.

Mr. Stradling Thomas: I am very proud to have been at Rugby school. I think that we are all proud of the schools that we attended. I do not accept the premise of the hon. Gentleman's question.
It is only right that there should be variety in education, and that people who wish to exercise their choice in this matter — most of whom are not from the better-off section of the community—should be allowed to do so. That is the purpose of the assisted places scheme.
The management of resources in Clwyd or in any other local education authority is a matter for the authority within the terms that make it possible for the authority to manage those resources more efficiently. It is a matter for the LEAs, not central Government.

Oral Answers to Questions — Voluntary Organisations

Mr. Knox: asked the Secretary of State for Wales what was the value of grants from his Department to voluntary organisations in each of the last three years, at constant prices.

The Parliamentary Under-Secretary of State for Wales (Mr. Wyn Roberts): Grants paid to voluntary organisations in the current financial year total about £8·6 million. The amounts for the previous two years, adjusted to 1984–85 price levels, are £8 million in 1983–84 and £6·8 million in 1982–83.

Mr. Knox: I welcome that encouragement to voluntary organisations. What is the spread of the grants?

Mr. Roberts: About 90 bodies are receiving grants this year. They are in four main areas: the personal social services, to which we give £1·7 million; further education and adult education, £3·3 million; voluntary education, £1·2 million; and Welsh language bodies, £1 million.

Mr. Meadowcroft: If the Secretary of State wishes to develop genuine collaboration between statutory and voluntary organisations, will the hon. Gentleman urge him to examine the problems caused by year-on-year funding and give more security of grant-aid over a number of years to assist with recruitment patterns and in developing proper services?

Mr. Roberts: We are greatly concerned with the problem to which the hon. Gentleman refers and, certainly in Wales, we take care over joint funding programmes.

Sir Anthony Meyer: Is my hon. Friend aware of the tremendous efforts that are made in my constituency to raise funds by voluntary means for the National Eisteddfod, which is to be held in Rhyll this summer? Will he make a statement about his Department's contribution towards that?

Mr. Roberts: I am happy to tell my hon. Friend that the National Eisteddfod next year will receive £232,000 from the Welsh Office alone. That is £12,000 more than the combined total of the Welsh Office and the Welsh Arts Council grant this year. As a result of concentrating the funding in the Welsh Office, the Eisteddfod loses nothing and the Welsh Arts Council gains from the Arts Council of Great Britain.

Mr. D. E. Thomas: Before the Under-Secretary gets carried away with his propaganda exercise about the National Eisteddfod, will he turn his attention to the much more important issue of the funding of Welsh Women's Aid? What representations has he received recently from that organisation about the level of funding? Will he confirm that the present level of funding is wholly inadequate for Welsh Women's Aid to meet the increasing incidence of personal relationship breakdowns caused by unemployment?

Mr. Roberts: Bids by Welsh Women's Aid for funding are dealt with in precisely the same way as other bids for funding. There is, of course, competition, but I am sure that the Welsh Women's Aid movement gets it proper deserts.

Mr. Roy Hughes: Amid all the largesse that is allegedly being distributed, will the Minister bear in mind that the town of Caldicot in the county of Gwent has to organise a dance to keep its citizens advice bureau in existence? Will he bear in mind the terrible social problems in the town, particularly the mass unemployment caused by the Government's economic policies? Will he see that such bodies are adequately funded?

Mr. Roberts: I have no objection to—indeed, would encourage — voluntary bodies doing all that they possibly can to increase their funding. The Government add to the funds which they are able to collect for themselves. We have shown clearly, by the increase in funding provided to voluntary bodies, that we fully appreciate the work that they do and wish to encourage them to do more.

Oral Answers to Questions — Labour Statistics

Mr. Roy Hughes: asked the Secretary of State for Wales how many people are unemployed in (a) Gwent and (b) Wales compared with 1979 as a total and a percentage; and of the total unemployed, how many are long-term unemployed.

Mr. Nicholas Edwards: On 14 February 1985 there were 29,350 unemployed claimants in Gwent. A comparable claimant-based figure for 1979 in Gwent is not available. On 14 February 1985 there were 183,806 unemployed claimants in Wales, an increase of 113·6 per cent. over the estimated figure of 86,044 for the same date in 1979.
In February 1985, 12,579 had been unemployed in Gwent for over one year. For Wales the figure was 75,964. That is the figure that I should have given to the hon. Member for Pontypridd (Mr. John).

Mr. Hughes: When will the Government make a really determined attempt to remedy this terrible unemployment, bearing in mind that the Budget is already a busted flush? The Secretary of State has dangled the bait of Concast over the Llanwern steelworks for long enough. When will he deliver the goods?

Mr. Edwards: I have not dangled the bait of Concast. That is a matter for the management of the steel industry, which has not yet taken decisions on Concast. I understand that it is considering that important programme. I remind the hon. Gentleman of the massive scale of investment in the Llanwern area to provide factories and the infrastructure for jobs since the rundown of the Llanwern steelworks.

Sir Raymond Gower: Is it not a fact that included in the figures is some unemployment which has been caused by the impact of the coal strike? Is my right hon. Friend aware that some of the smaller companies which supply the National Coal Board have suffered rather seriously and that there has been a consequential loss of employment in that sector, too?

Mr. Edwards: Undoubtedly there have been severe consequential effects, especially in Wales. I hope that we shall see a recovery during the current year, as energetic efforts are made to restore the NCB's operations in Wales. I can tell my hon. Friend that between 1983 and 1984 there seems to have been an above-average increase in Wales in the numbers of self-employed and small businesses starting up. Undoubtedly, these are encouragng trends.

Mr. Foot: Is the Secretary of State aware that last week the Chancellor of the Exchequer repeated his claim that we are now in the fourth year of economic recovery? Does the right hon. Gentleman claim that that applies to Wales, especially to those parts which have had over 20 per cent. unemployment throughout the four years?

Mr. Edwards: We face a problem of rising output and investment at a time when the same output can be produced by fewer people. That means that the two statements are not incompatible. If the right hon. Gentleman does not understand that by now, it is hard to see how I can make the point to him again so that he does.

Sir Anthony Meyer: Is my right hon. Friend in a position to assess the number of jobs in British Rail that have been lost because of the refusal of the railway unions to carry material supplies through to Llanwern, and to comment on the attitude of the hon. Member for Newport, East (Mr. Hughes) during the dispute?

Mr. Edwards: Undoubtedly business has been lost by the railways. We shall have to see whether that business can be recovered. I think I am right in saying that as a result of the coal strike about £25 million has been added to the loss made by the railways.

Mr. Ray Powell: Is the Secretary of State aware that in Ogmore there are 8,000 out of work and that last Friday there were 101 vacancies available at the jobcentre? Is he further aware that the St. John's colliery in Maesteg, where currently 834 miners are employed, is threatened with closure? If the colliery is closed, male unemployment will increase to 45 per cent. in the Maesteg area alone. What effect will the Budget have and what can the Secretary of State do to reduce unemployment and provide a chance in future for the Maesteg area?

Mr. Edwards: The local manager of the Welsh Development Agency has reported an increase of almost 100 per cent. in factory lettings to 140,000 sq ft in the Bridgend area for the 10 months of 1984–85 compared with the whole of 1983–84. A great deal of new investment is being made in the area, and that will help to provide the jobs that are undoubtedly needed.

Oral Answers to Questions — Education Expenditure

Mr. Harvey: asked the Secretary of State for Wales by how much spending on education in Wales has increased since 1979, compared with the period 1974 to 1979; and by how much the teacher-pupil ratio in Wales has changed since 1979.

Mr. John Stradling Thomas: Between the financial years 1978–79 and 1983–84, local authority education expenditure increased in cost terms by 0·7 per cent. compared with a decrease of 7·5 per cent. between 1974–75 and 1978–79. The overall pupil-teacher ratio was 18·2:1 in January and 17·3:1 in January 1984.

Mr. Harvey: Does my hon. Friend agree that those remarkable figures show that the only cuts in education expenditure during the past decade have taken place under a Labour Government? Does he further agree that the industrial dispute involving the teachers is causing damage to education in Wales?

Mr. Stradling Thomas: I certainly agree with my hon. Friend. The figures do not lend support to those who claim that heavy cuts have occurred since 1979. In 1983–84 current expenditure on education, excluding school meals and milk, was almost 4 per cent. greater in cost terms than in 1978–79, but between those years pupil numbers fell by 11 per cent. and teacher numbers by only 6 per cent. I urge the teachers to set a good example.

Dr. Marek: What would be the effect on those figures if the Clegg award, which was made in 1979–80, were taken into account? Does the hon. Gentleman agree that that Clegg award distorts the figures? Does he further agree that if the figures were adjusted to take account of that award education expenditure would be shown to have decreased under the present Tory Administration and to have increased under the previous Labour Adminstration?

Mr. Stradling Thomas: I cannot agree with the hon. Gentleman. The Clegg award was taken into the account in the figures that I cited.

Dr. Marek: No.

Mr. Stradling Thomas: I assure the hon. Gentleman and the House that it was.

Oral Answers to Questions — Labour Statistics

Mr. Rowlands: asked the Secretary of State for Wales what is the current level of unemployment in Merthyr Tydfil and the Rhymney valley; and what percentage increase this is over the figures for May 1979.

Mr. Nicholas Edwards: On 14 February 1985 the number of unemployed claimants in the Merthyr and Rhymney travel-to-work area was 10,781. Comparable figures for May 1979 are not available because of changes to travel-to-work area boundaries and the move to claimant-based figures.

Mr. Rowlands: Among those horrifying figures is the total job loss after the closure of Hymac. Does the Secretary of State recall the repeated appeals that we all made to him and to the Government to act to stop the dumping of Japanese products on our market? Only now, after all those jobs have been lost, have the Government imposed a 33·33 per cent. tariff on Japanese products coming on to our market. Will the right hon. Gentleman take heed of this sad lesson and support action against cheap and unsafe lifebelts, domestic appliances and washing machines coming on to the British market and take more direct action to protect our jobs? The Secretary of State did nothing for Hymac.

Mr. Edwards: The hon. Gentleman is aware that we have to provide evidence and obtain the agreement of the Community to take such measures. As a country which not only benefits enormously from international trade but is increasing its exports, Britain must be exceedingly careful about the way in which that is done. As I have told the hon. Gentleman frequently, if he will provide evidence, I shall be happy to pass it on to the Department of Trade and Industry, which is responsible for these matters.

Oral Answers to Questions — Measles, Whooping Cough and Poliomyelitis

Mr. Grist: asked the Secretary of State for Wales what has been the percentage rate of inoculation and vaccination of children for measles, whooping cough, and polio in the last two years for which figures are available.

Mr. Wyn Roberts: The percentages of children in Wales vaccinated by their second birthday against measles, whooping cough and poliomyelitis in 1982 were 40 per cent., 33 per cent. and 81 per cent., respectively. In 1983—the latest year for which figures are available—the comparable percentages were 44 per cent., 42 per cent. and 82 per cent.

Mr. Grist: Does my hon. Friend agree that the take-up of vaccination for measles and whooping cough is alarmingly low, not least in view of the fact that measles is a disease that can be eliminated, as was smallpox? Does he further agree that people are laying themselves and their children wide open to severe suffering, and possibly death? What steps is my hon. Friend's Department taking to popularise and spread the take-up of these vaccinations?

Mr. Roberts: My hon. Friend is correct. There are good take-up rates for poliomyelitis, diptheria and tetanus vaccinations, but they need to be proved still further. Uptake rates for other vaccinations, including measles and whooping cough, are far from satisfactory. We intend to continue to improve the way in which we put the case for immunisation against those diseases.

Dr. Roger Thomas: The vast majority of the states in America are now totally measles-free. When can we look forward to a Wales that is totally measles-free? What percentage of children receiving the diptheria vaccination also receive the whooping cough vaccination, and what percentage do not receive the whooping cough vaccination?

Mr. Roberts: The hon. Gentleman is well aware that the uptake of the measles vaccination in Wales has not been all that good. Similarly, the uptake of whooping cough vaccination is nothing like as good as that of polio vaccination. That is presumably because of the adverse

reactions that are remotely possible with those vaccinations. However, I am sure that the hon. Gentleman will be pleased to know that the measles vaccination rate in Wales since 1978 has improved by 17 percentage points. We launched a major drive last year aimed at increasing the uptake among pre-school and primary school children and achieving a 90 per cent. uptake among children in the second year of life by 1990, with the eventual aim of eliminating the disease.

Oral Answers to Questions — Teachers (Pay Dispute)

Sir Anthony Meyer: asked the Secretary of State for Wales if he will estimate the number of pupil-hours lost in Wales in consequence of the current teachers' pay dispute.

Mr. John Stradling Thomas: It is not possible to make a reliable estimate from the information that is available centrally. However, a substantial number of schools have been closed or disrupted by industrial action in recent weeks, and I greatly deplore the harm that that is doing to the education of our children at this crucial time in the academic year.

Sir Anthony Meyer: Is my hon. Friend aware that most teachers recognise perfectly well that they have no chance whatever of winning this naughty strike against a Government as resolute as the present one? Will my hon. Friend also consider that teaching is a vocation, not merely a profession, and that in dealing with the teachers he would do well to listen to what is being said by responsible trade union leaders, such as the leader of the Professional Association of Teachers and the leader of the National Union of Teachers in my constituency, who have called upon the teachers to accept arbitration?

Mr. Stradling Thomas: I am aware that there are mixed views within the profession, but the Government deplore the industrial action being taken by members of the NUT and the National Association of Schoolmasters/Union of Women Teachers. The effects on children's education are severe and can never be fully rectified. Teachers must consider whether strikes and other forms of industrial action help their cause. In my opinion, they can only damage the children, the education service as a whole and, by turning the community against them, the teachers themselves. Hurting pupils is the wrong way of proceeding.

Mr. D. E. Thomas: Does the Minister of State accept his responsibility and that of the Government in precipitating this industrial dispute? Will he now confirm that the Government's policy of imposing limits upon local authorities' finance makes it impossible for them to meet the teachers' claim or to negotiate freely with them?

Mr. Stradling Thomas: I accept none of the comments that the hon. Gentleman has just made. As I have said several times at the Dispatch Box, and again today, the management of resources is a matter for the local education authorities. There have been no drastic cuts in the provision for education, despite the allegations that have been made. It is for local education authorities to manage their resources wisely and efficiently to maintain the standards in education that we all wish.

Mr. Barry Jones: What is the Minister of State doing to resolve the dispute? Will the Government intervene in


a positive manner? If the dispute goes to arbitration, will the Government guarantee that the award will be backed by Government funds?

Mr. Stradling Thomas: It is clear that there is not the money available to meet the teachers' demands. Therefore, it is for them to come back and negotiate a sensible settlment, which could be achieved by sitting down and talking sensibly about the restructuring of the profession.

Oral Answers to Questions — NHS Patient Records

Mrs. Clwyd: asked the Secretary of State for Wales if he will make a statement on the confidentiality of patient records in the National Health Service in Wales.

Mr. Wyn Roberts: The Data Protection Act 1984 requires health authorities and family practitioner committees to adopt new practices for handling personal health records. The Welsh Office has recently consulted health authorities and other interests in Wales about a draft code on confidentiality of personal health information and comments received are being considered. I shall announce my conclusions in due course.

Mrs. Clwyd: I thank the Minister for his reply. Will he confirm that patient records should be confidential between doctor and patient and that they should not be released to an outside body, whatever the circumstances, without the patient's express permission?

Mr. Roberts: That is the case. We are consulting on the character of the code and will make our views known in due course.

Mr. Meadowcroft: Are considerations of confidentiality inhibiting the computerisation of family practitioner committee records, on which depend the accuracy and reliability of recall for patients, especially as regards screening for cervical cancer?

Mr. Roberts: I am not aware of computerisation and data protection holding up progress such as the hon. Gentleman mentioned.

Mr. Coleman: In view of recent publicity concerning referrals for cervical cancer screening, has the Minister made inquiries in Wales to ascertain the efficiency of the system? Will he take this opportunity to make it clear that responsibility for issuing notification does not lie with the laboratories that carry out the tests?

Mr. Roberts: The hon. Gentleman is right. We have made inquiries, and proper instructions have been issued.

Oral Answers to Questions — Coal Industry Dispute (Consequences)

Sir Raymond Gower: asked the Secretary of State for Wales what is his latest information regarding the consequences in Wales of the coal mining strike in loss of coal production, revenue for British Rail, production of steel, production of tinplate, injurious effects on other industries and in consequential loss of jobs; and what consultations he will have with the Confederation of British Industry, leaders of nationalised industries and private industries, local councils and public authorities and with trade unions to seek to secure the earliest possible recovery from these consequences.

Mr. Nicholas Edwards: In South Wales, some 7 million tonnes have been lost and 11 coal faces have been

destroyed. Progress towards viability has been seriously disrupted and vital investment has been delayed. British Rail in Wales attributes losses of some £25 million to the strike. That is the figure that I gave to my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) a few moments ago. That is for the losses in Wales. The British Steel Corporation had to meet extra costs of keeping its customers supplied, but no separate figures for Wales are available. The impact on other areas has been small. I shall continue to maintain close contact with all sectors involved in the Welsh economy.

Sir Raymond Gower: Can my right hon. Friend assure us that there will be early consultation with all those I have mentioned, and others, who are anxious to ensure the earliest and most complete recovery from the effects of the recent stoppage?

Mr. Edwards: I keep in close contact with all interested groups in Wales. If anyone has any particular representations to put to me on that matter, I am ready to receive them.

Oral Answers to Questions — Labour Statistics

Mr. Ray Powell: asked the Secretary of State for Wales what are the latest unemployment figures available for (i) Ogmore constituency, (ii) Mid Glamorgan county council and (iii) Wales.

Mr. Nicholas Edwards: On 14 January 1985 the numbers of unemployed claimants were 4,690, 35,756 and 183,806, respectively.

Mr. Powell: Further to a question that I asked earlier about Ogmore and unemployment there, is the Secretary of State aware that 2,000 people in the borough are applying for rented council accommodation but that the local authority is not funded sufficiently to house more than 100 a year for the next five years? Is he further aware that 50,000 construction workers are out of work in Wales? Is it not time that we started to build the houses, hospitals, schools and sheltered accommodation that people in the area need?

Mr. Edwards: The hon. Gentleman, of all people, should be aware that we have just completed and handed over on time a district general hospital in his area. That is extremely creditable. It is part of a massive hospital building programme in the Principality.

Oral Answers to Questions — Departmental Policies (Job Creation)

Dr. Marek: asked the Secretary of State for Wales what impact he expects his policies to have on the level of unemployment in Wales.

Mr. Nicholas Edwards: Beneficial.

Dr. Markek: I genuinely believe that the Secretary of State wants to bring employment to Wales, but what is he doing to persuade his Cabinet colleagues about the need in the Principality to stop our sewers crumbling to pieces, our housing stock declining at an alarming rate, our railway track being in danger of being pulled up, and our roads being inadequate? When will he persuade the Government to start a programme of development and public spending to keep our infrastructure from rotting to pieces?

Mr. Edwards: We are conducting a massive programme of road construction in the hon. Gentleman's


part of Wales. Industrial Planning and Development, in its January edition, reported that 1984 was a momentous year at Wrexham. Approximately 400,000 sq ft of factory space was let or purchased, 50 acres of industrial land was acquired by clients, and more than 1,000 new job opportunities will be provided by those developments. I know of more than 1,500 new jobs that will be provided by major industrial developments in the hon. Gentleman's constituency, which have been announced during the past 12 months.

Mr. Ron Davies: On a point of order, Mr. Speaker. I wish to give notice that I shall raise a point of order on Welsh questions after questions on the Arts.

Oral Answers to Questions — THE ARTS

Private Funding

Mr. Proctor: asked the Parliamentary Under-Secretary of State answering in respect of the Arts what further plans the Minister for the Arts has with regard to encouraging private funding of the arts; and if he will make a statement.

The Parliamentary Under-Secretary of State for the Environment (Mr. William Waldegrave): From 1 April my noble Friend will be introducing changes designed to make his business sponsorship incentive scheme even more attractive to small and medium-sized companies.
I also remind my hon. Friend that the Budget doubled the limit of higher rate tax relief for covenants to charities, which will undoubtedly encourage more private support for the arts.

Mr. Proctor: Does my hon. Friend agree that at a time when state sponsorship of the arts is likely to be maintained at current rather than increased levels in real terms, as it has been during the past six years, schemes of the kind that he has announced are important, especially the special bonus for first-time company sponsors and the pound for pound approach that the Government are pursuing?

Mr. Waldegrave: Yes, Sir. It was encouraging to see that Arthur Anderson came forward under that scheme to support the foyer programme at the National Theatre.

Mr. Freud: The House will appreciate the help that was given by the hon. Gentleman's noble Friend in matching on a pound for pound basis, but will he bear in mind that in the United States a great deal of money is raised for the arts by giving tax concessions to individuals? Will he ask his right hon. Friend the Chancellor of the Exchequer to consider further tax incentives for individuals who help the arts?

Mr. Waldegrave: Yes, Sir. That is kept under review. The previous Conservative Administration shortened the period for covenants, which helped a good deal, and we shall certainly keep the matter under review.

Mr. Jessel: Does my hon. Friend believe that more private funding could be obtained for the National theatre?

Mr. Waldegrave: I have already referred to the private money arranged for the foyer programme. I hope that more money can be found for the main programmes of the National theatre. I should have thought that there must be some scope for that.

Mr. Buchan: Will the Minister bear in mind that the amount of support coming forward for the National theatre in its crisis from the public sector—that is, the Greater London council—is 10 times as much as that coming from the private sector? We welcome the changes that have taken place, but is the hon. Gentleman aware that there is a fear in the arts that they will be a replacement and substitute for proper public funding, and does he agree that that should not be tolerated?

Mr. Waldegrave: It is not a matter of replacement. The Government are cutting direct taxes. If the other side of that is rather less state funding, people should support those interests that they value, if they value them.

Mr. Crouch: Does my hon. Friend agree that keeping a subject under review is rather an unimpressive way of trying to persuade the Chancellor of the Exchequer to change his mind? Does he accept that help for living artists by tax concessions should not only be kept under review, but delivered by a lobby or pressure group to the Chancellor?

Mr. Waldegrave: I accept what my hon. Friend says, but we should remember that there is already considerable scope for private tax concessions on donations. A full change to the American system would have some less desirable aspects.

Arts Council Drama Panel

Mr. Fisher: asked the Parliamentary Under-Secretary of State answering in respect of the Arts whether the Minister for the Arts intends to meet the chairman of the Arts Council to discuss the composition of the Arts Council drama panel.

Mr. Waldegrave: My right hon. and noble Friend meets the chairman of the Arts Council on a regular basis to discuss matters of common interest.

Mr. Fisher: Does the Minister realise that the seven drama panel members who resigned recently did so because they, with other leading writers, directors and actors, no longer have confidence in the Arts Council? They no longer have confidence that the Arts Council represents and fights for their views and for the future of the theatre. They believe that the Arts Council has become a pawn for Government economic policies and cuts. Does the Minister believe that he can find leading practitioners in the professional theatre to take those seven places?

Mr. Waldegrave: It is impossible to change anything without offending vested interests, which will on some occasions resign.

Mr. Tony Banks: Is it not a fact that the controversy surrounding the drama panel and, indeed, the Arts Council in general, can be welcomed on at least one level: that the concept of the arm's length policy has been rubbished for the myth that it has always been? The Arts Council is a political body: it is made up of people appointed by the Government, and the present director general and chairman of the Arts Council are both Tories.

Mr. Waldegrave: The hon. Gentleman's position on that matter is no more consistent than it has ever been. I happen to know that he wants the Arts Council—if he wants it at all — to be a political body, so I do not understand why he accuses us of making it so. But he is wrong. The Arts Council is not a political body.

Arts Performances (Funding)

Mr. Meadowcroft: asked the Parliamentary Under-Secretary of State answering in respect of the Arts what study has been made of the relative cost-effectiveness of (a) general subsidies for arts performances and (b) specifically-targeted assistance for needy individuals towards the cost of attending such performances.

Mr. Waldegrave: The Arts Council of Great Britain and several regional arts associations have experimented with schemes for assisting audiences with the cost of attending performances, but in general have found these more expensive than subsidy.

Mr. Meadowcroft: Accepting that both the Minister and want to maximise attendance at arts functions, does he agree that, despite legitimate subsidies, many seats are still too dear for poorer people? Is it not important to continue to try to find ways of assisting people across the board to attend arts functions?

Mr. Waldegrave: I accept the hon. Gentleman's point. Experiments that have been conducted appear to show that keeping down the cost of seats in general is a better way of doing it. As is often the case, the more complicated schemes seem to help the articulate more than the needy.

Mr. Budgen: Has my hon. Friend thought of a method of assessing the average annual incomes of those who attend subsidised arts performances?

Mr. Waldegrave: It would be an interesting survey to conduct, but I am not sure that it is within the resources of the Office of Arts and Libraries to do so.

Northern Arts

Mr. Dormand: asked the Parliamentary Under-Secretary of State answering in respect of the Arts what proposals the Minister for the Arts has to increase resources available to Northern Arts.

Mr. Waldegrave: It is for the Arts Council, not for my right hon. and noble Friend, to determine the allocation of central resources to a regional arts association.

Mr. Dormand: Surely the Minister has some responsibility in this matter. It is no good shuffling it off like that. Is he aware that in real terms, and possibly even in cash terms, the money available for Northern Arts will be reduced during each of the next three years? As the northern region receives so little in other ways from the Government, and as the position will become worse because of the new regional policy, is there not the strongest possible case for increasing grants to Northern Arts? The Minister knows that there is a demand. He

knows the response to the annual visit of the Royal Shakespeare Company to Newcastle upon Tyne, where the seats are sold out weeks beforehand.

Mr. Waldegrave: The hon. Gentleman should wait a little. What has been announced so far is only the base funding for Northern Arts. Further grants will be announced later this week, and they may contain some good news for him.

Mr. Buchan: Is not the real problem that, apart from what the Minister for the Arts may decide about the Arts Council, the cutting, capping and abolition of local authorities will dramatically lower the amount of money available? Indeed, according to Luke Rittner of the Arts Council, the £34 million that has been earmarked to replace the funding provided by the metropolitan councils is £8 million short of what will be needed. Is not the problem that of cuts centrally, during the next three years and at the same time a reduction in the resources available to local authorities to try to resolve the problem, even in such a fine area for the arts as the northern region?

Mr. Waldegrave: Considering the resources available to local authorities as a whole, I believe that they could provide the additional funding if they wanted to do so. It is inconceivable that any figure announced by the Government would be deemed satisfactory by the Opposition. It would always be alleged to be to little.

Europa Nostra (Departmental Co-operation)

Mr. Murphy: asked the Parliamentary Under-Secretary of State answering in respect of the Arts what co-operation exists between the Office of Arts and Libraries and Europa Nostra; and if he will make a statement.

Mr. Waldegrave: None, Sir.

Mr. Murphy: I thank my hon. Friend for the precision of his answer. Does he agree that Europa Nostra has a marvellous reputation for the preservation of the artistic and architectural heritage? Therefore, would it not be beneficial to have co-operation between the Office of Arts and Libraries, the Department of the Environment and that organisation?

Mr. Waldegrave: I am sure that my hon. Friend is aware that that organisation is not open to membership by Governments, which is why the Government are not a member of it. A number of important institutions, such as the National Trust, are members of and co-operate with it. I know that my noble Friend Lord Avon will be having the luck to go to a conference in Spain this year at which Europa Nostra is to make a contribution.

Questions to Ministers

Mr. Ron Davies: On a point of order, Mr. Speaker. I appreciate that you are not responsible for the quality of answers given by Ministers during Question Time, and in the case of Welsh questions you are no doubt eternally grateful for that. On question 1, I put particular points to the Secretary of State about the operation of the NACODS agreement and its—

Mr. Speaker: Order. The hon. Gentleman is seeking to prolong Question Time. He is putting a question to a Minister when he should be putting a question to me.

Mr. Davies: I understand that and my question is to you, Mr. Speaker. At Question Time, I put particular questions to the Secretary of State, and it is the interpretation of those questions and matters of procedure arising from that that I wish to raise with you.
I asked the Secretary of State whether he would confirm that last autumn the Secretary of State for Energy said that the NACODS agreement was inviolate. The Secretary of State for Energy made a statement to the House, for which you, Mr. Speaker, are responsible and on the interpretation of which hon. Members look to you for guidance. The Secretary of State said that the NACODS agreement was available to the NUM. Last week, the National Coal Board management in south Wales—

Mr. Speaker: Order. This is an extension of Question Time. The hon. Gentleman must find other ways to deal with the matter. This is not a question for me. I cannot be responsible for answers given from the Front Benches or for questions asked from the Back Benches.

Mr. Davies: It is a procedural question, Mr. Speaker. I ask you to bear with me for a moment. The Secretary of State is responsible for the operation of the NCB in south Wales. Last week, the NCB effectively abrogated the NACODS agreement in respect of the Bedwas pit in my constituency. Have you any powers, Mr. Speaker, under Standing Orders, to require the Secretary of State, on behalf of the Government, to say whether the NACODS agreement is still in existence or whether the NCB, on behalf of the Government, has abrogated that agreement in south Wales?

Mr. Speaker: Order. The hon. Gentleman knows that I have no such power.

South Africa (Shootings)

Mr. Donald Anderson: (by private notice) asked the Secretary of State for Foreign and Commonwealth Affairs, if he will make a statement on what response he has made and what further steps he proposes following the massacre of blacks in South Africa.

The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind): My right hon. and learned Friend the Foreign Secretary issued a statement on 22 March strongly condemning the shootings at Uitenhage and calling for the fullest possible investigation. My hon. Friend the Member for Shoreham (Mr. Luce) summoned the South African ambassador. We view the latest events in South Africa with abhorrence. The deaths are particularly tragic, not only because they occurred on the anniversary of Sharpeville but because they fly in the face of certain more hopeful developments in recent months. We will continue to use all our influence to press the South African Government to introduce the fundamental reforms so clearly needed.

Mr. Anderson: I welcome that response, as far as it goes. Does the Minister not recognise that this massacre, on the 25th anniversary of the massacre at Sharpeville, shows the reality of oppression in today's South Africa and the clear failure of the policy of constructive engagement pursued by this Government and our United States partners?
Since the Prime Minister welcomed President Botha to Chequers on 2 June last year, we have seen, first, the imprisonment of Union Defence Forces leaders and, secondly, the craven British Government response to the Coventry four affair. Are the British Government to continue a policy which consists only of good intentions and of the Minister periodically wagging his finger at the South African ambassador, and which makes us trail behind even right-wing Congressmen in the United States? They do so by ruling out in advance the only policy that could bring effective pressure on the South Africans, which is selective disinvestment. Will the Minister now take the lead in urging the Reagan administration to develop a common western policy on selective disinvestment until Namibia is independent and the end of apartheid is nigh and also join in the Dutch initiative within the European Community on the UDF show trial which is shortly to take place?

Mr. Rifkind: I and, I am sure, many others find it difficult to understand why, if a policy of dialogue is thought to be appropriate for totalitarian states in eastern Europe and the Soviet Union it is always thought to be inappropriate for the South African Government. If we are seeking to influence the leaders of those countries to adopt a more constructive and sensible policy, to refuse to talk to them seems to be a rather negative way of furthering that objective. As for the hon. Gentleman's call for economic sanctions, I have to remind him not only that the last Labour Government believed that such a policy would be inappropriate but that black opinion in South Africa is deeply divided on this issue. Opinion polls conducted by the Human Sciences Research Council and by Professor Schlemmer showed heavy majorities among blacks in South Africa against such a policy. This is also the view of leading black South Africans.

Mr. Robert Rhodes James: Would this not be a good moment to remind the South African Government of the fact that they accepted United Nations Security Council resolution 435 relating to the independence of Namibia?

Mr. Rifkind: I agree with my hon. Friend that Security Council resolution 435 has been accepted by all the parties interested in the future of Namibia. It is very much to be regretted that there has been very little progress over the implementation of that resolution.

Dr. David Owen: Probably what is wanted for South Africa is a policy of sticks and carrots. It is right to have a dialogue, but it is also necessary to exert pressure. Will the Minister of State consider whether a system would be devised whereby no new investment is made in South Africa unless it is clearly geared to black well-being? If such a policy were to be linked with progress towards abolishing apartheid and the implementation of Security Council resolution 435, it would gain a great deal of support in the United States.

Mr. Rifkind: I notice that the right hon. Gentleman said yesterday in his Sunday Times article:
Total or even selective trade sanctions will not succeed.
I presume that that is still the view today of the right hon. Gentleman. One would have to examine the likely consequences of any such measure in order to decide whether it would achieve the advantages which are often advocated. We are all anxious to press South Africa to introduce real reforms, but there is deep scepticism as to whether economic sanctions would bring that about.

Mr. John Carlisle: Will my hon. Friend accept that the whole House wishes to express great regret at the sad deaths of the blacks in the eastern Cape and, indeed, at the surrounding circumstances? Will he also accept that this is not the time for recrimination or sanctions, that we should acknowledge that substantial changes have been made to the South African constitution and that State President P. W. Botha has made a genuine case for reform? Now is the time not for those on the Opposition Benches to parade their consciences but for co-operation in order to try to show sympathetic understanding of the dilemma which the South African Government face.

Mr. Rifkind: I am certainly prepared to acknowledge that in recent months there have been some important and significant changes in South Africa. However, events such as the one to which this question refers inevitably call into doubt the possibility of the South African Government pursuing the kind of fundamental reforms that are necessary to prevent events of this kind from happening again. We welcome the fact that there is to be a full and independent judicial inquiry into the killings. We hope that that inquiry will not only ascertain the full facts but, if appropriate, will ensure that the necessary action is taken against those responsible.

Mr. David Winnick: Do not the words uttered by the hon. Member for Luton, North (Mr. Carlisle) shame the House of Commons and do not these tragic events demonstrate how little has changed since Sharpeville and that the bullet and the whip remain the hallmark of the apartheid regime? Instead of wining and dining the Prime Minister of South Africa at Chequers, would it not be far better for the British Government to

show how serious they are about apartheid and, with the United States and other western countries, try their utmost to help to defeat and isolate the apartheid regime?

Mr. Rifkind: The hon. Gentleman is ignoring some of the important and positive changes that have taken place in recent years, such as the legalisation of black trade unions, the extension of 99-year leasehold rights to blacks in South Africa, and the realisation and admission by the South African state President that the homelands can offer no answer to the political aspirations of urban blacks. Those and a number of other changes are positive and are in the right direction, but we must emphasise to the South African Government that South Africa and its problems clearly need fundamental reform and that simply to tinker with the existing system is not enough.

Mr. Anthony Nelson: Will my hon. Friend confirm that the British Government's policy remains to support political evolution rather than revolution in South Africa and that such an end will not be achieved by the imposition of sanctions which would be unworkable and counter-productive, and, in the end, would harm most the black populations of southern Africa?

Mr. Rifkind: I agree that it can be in no one's interest, black or white, for political change in South Africa to come about by violent means. We hope that the South African Government will appreciate that the best way of avoiding such events would be to enter into a real and sustained dialogue with the genuine leaders of black opinion in South Africa.

Mr. Ian Mikardo: Is it not now super-abundantly clear that the policy called constructive engagement which is pursued by the State Department, with our Foreign Office tagging along behind, has achieved nothing constructive and is not achieving and is not likely to achieve anything constructive? Therefore, is it not time that Her Majesty's Government rethought the matter, even if Washington is too fossilised to do so?

Mr. Rifkind: Anyone who believes that there has been no change in the right direction in South Africa in recent years simply refuses to look facts in the face. There have been changes, they are to be welcomed, and that is important.

Mr. Gerald Kaufman: The hon. Gentleman is an apologist for the South African regime.

Mr. Rifkind: No.
If the hon. Gentleman believes that South Africa today is exactly the same as South Africa 20 years ago, he is simply showing his ignorance of that subject. If he is suggesting that there has not yet been sufficient reform in South Africa to guarantee that the aspirations of all the people there will be satisfied, I, and I think the House, would agree.

Mr. Ian Lloyd: Nothing is easier, especially at the moment, than to throw the whole lexicon of political abuse at South Africa, and Labour Members are particularly adept at so doing. Rather than now, in breach of the most fundamental treaty of the United Nations, attempting to interfere in the domestic affairs of South Africa, which hon. Members on both sides of the House


may think justifiable, would we not be more likely to achieve a constructive and positive influence by offering help rather than criticism?

Mr. Rifkind: We must offer help, but the best help that one can give to South Africa is to make frank criticism when that criticism is justified. We would not be doing a good service to South Africa or its long-term interests by ignoring the abhorrence that we all feel at recent events.

Mr. Russell Johnston: As the Minister has already said several times that he regards these events as abhorrent, as I think we all do, and as he has also said that there is a need for fundamental reform rather than simply dealing with details, what exactly does he think that the Government should do to contribute to that, either by ourselves or in conjunction with our European partners?

Mr. Rifkind: We have made it clear many times to the South African Government that if they wish to be treated as a respectable and acceptable member of the international community, the western civilised standards to which they say they are committed must be translated into practice in the way that they deal with all their citizens, black or white.

Mr. Mark Carlisle: Although I, too, like my hon. Friend the Minister, totally abhor what has happened in South Africa, I accept too that there has been some movement there in recent years. But will my hon. Friend continue to point out to the South African Government that they have no hope of being accepted by the international community unless they make major changes in their policy towards apartheid?

Mr. Rifkind: We have made it clear to the South African Government that if there is modest reform in South Africa, we shall give it a modest welcome, but that if they want a more sustained and enthusiastic welcome for their policies, their reforms must be that much more fundamental and far-reaching.

Mr. Robert Hughes: Does the Minister not recognise that the killings in South Africa are simply the most recent manifestation of the naked abuse of racialist power? Does he not accept that it throws those so-called reforms totally into question and shows quite clearly that they are nothing more than a cynical, callous charade? Is it not time that he took stock of the situation? The Government have helped, assisted and defended the South African Government for far too long, and it is time that they took some action and applied economic sanctions.

Mr. Rifkind: This Government do not defend the South African Government. If the South African Government carry out policies which we consider to be appropriate, we welcome them, but, if they do not, we condemn them. We have had no hesitation in making our views on such matters very clear. If the hon. Gentleman wishes to put forward a policy of economic sanctions or embargoes, he should at least take into account the opinion of black South Africans, which, on all the evidence that we have, is still overwhelmingly against such a policy.

Mr. Robin Maxwell-Hyslop: So that our condemnation of these atrocities in South Africa is not

regarded as in any way hypocritical, will my hon. Friend ensure that the Government equally fiercely condemn the massacre of civilians in Lebanon by the Israeli armed forces and the religious discrimination shown by the Israelis towards Shi'ite Moslems?

Mr. Rifkind: The Government condemn the abuse of human rights wherever it may take place.

Mr. Roland Boyes: Is the Minister aware that we import coal from South Africa? After the latest set of shootings, is there not South African blood on every nugget of coal that we import? Should not the Minister tell the Secretary of State for Energy to end those imports until world pressure and other pressures have got rid of apartheid in South Africa?

Mr. Rifkind: We have imported coal from the Soviet Union, and I do not recollect the hon. Gentleman calling on us to cease that trade.

Several Hon. Members: rose—

Mr. Speaker: Order. This is a private notice question, an extension of Question Time, and we must move on.

Mr. Norman Buchan: On a point of order, Mr. Speaker. With all respect, may I point out that this issue in this House at this time is a matter of concern not only for us in Britain, but throughout the world? The House has not yet had an opportunity to express its total abhorrence, and to state that it regards the events of the past 48 hours as an obscenity. In addition, if the Government do not have an opportunity to say that they are as firm as the Opposition are on this issue, the wrong message may well go out from this House.

Mr. Speaker: I have to have regard to all right hon. and hon. Members. This is an extension of Question Time. There is a statement to follow, and 27 right hon. and hon. Members wish to take part in the final day of the Budget debate. It would be unfair to allow questions on this issue to go on until everyone has been called.

Mr. Jeremy Corbyn: Further to that point of order—

Mr. Martin Flannery: Further—

Mr. Speaker: Order.

Mr. Corbyn: Will you not accept, Mr. Speaker, that as this country is a major investor in South Africa and has major trading links with it, what is said in the House is important to the tragedy going on in South Africa, as blacks are murdered by the apartheid regime?

Mr. Speaker: The hon. Gentleman is seeking to extend the debate. [Interruption.] Order. There will be other opportunities to discuss this issue, and I should have thought that there was a good opportunity to do so tomorrow on the motion on the Easter Adjournment.

Mr. Buchan: On a point of order, Mr. Speaker.

Mr. Speaker: Order. The hon. Gentleman's point of order is an abuse, because it reduces the amount of time available to other hon. Members who want to speak. However, I must hear him.

Mr. Buchan: I wish only to pursue the one point you made, Mr. Speaker, when you said that there was an opportunity to debate the issue tomorrow. What opportunity is that?

Mr. Speaker: Tomorrow there will be a debate on the Easter Adjournment motion. That is a wide subject and all sorts of matters may be raised. The hon. Gentleman does not need me to tell him that he could make the point that the House should not adjourn for Easter until this issue has been discussed.

Foreign Affairs Council

The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind): I will with permission, Mr. Speaker, make a statement on the meeting of the Foreign Affairs Council which was held in Brussels from 17 to 21 March and at which my right hon. and learned Friend the Foreign Secretary and I represented the United Kingdom. My right hon. Friend the Minister for Trade was our representative at a meeting of trade Ministers which was held within the Council on 19 March.
The Community made major progress in dealing with the outstanding problems in the enlargement negotiations with Spain and Portugal. On fisheries, the Community and Spain were able to agree on the general framework for integrating the Spanish fleet into the common fisheries policy on a basis which safeguards the balance of fishing opportunities for existing member states under the common fisheries policy. Good progress was also made with the Portuguese, though a number of specific issues remain outstanding on the fisheries chapter with both candidates.
Considerable progress was also made in resolving the differences between the Community and Spain and Portugal on agriculture and social affairs. A special Foreign Affairs Council, with further ministerial meetings with Spain and Portugal, will be held on 28 March to seek to reach agreement on the outstanding issues before the European Council.
Substantial progress was made on the text of the own resources decision, including provision for our 1,000 million ecu abatement in respect of 1984 and implementation of the Fontainebleau mechanism for United Kingdom rebates in future years. The text is now agreed subject to a Greek waiting reserve. The text provides that, immediately after notification that the new own resources decision has been adopted and ratified by national Parliaments, our 1,000 million ecu abatement should be paid through an anticipation of the new own resources. Subject to ratification of the accession treaty, increased own resources for all other purposes would become available from 1 January 1986. Meanwhile, the Community's budgetary obligations in 1985 should be met through intergovernmental agreement.
Trade Ministers meeting within the Council discussed the proposal for a new round of multilateral trade negotiations in the GATT. They declared the Community's readiness to participate in such a new round, subject to the establishment of an adequate consensus on objectives, participation and timing. The Community undertook to enlist the support of its trading partners, particularly among the developing countries, to this end. The full text of the Council declaration has been placed in the Library of the House.
The Council also discussed the Commission's latest proposals for integrated mediterranean programmes. The subject will be discussed by heads of Government at the European Council on 29 and 30 March.

Mr. Donald Anderson: Have not the fine words of the Fontainebleau summit last June dissolved into a lake of self-delusion as the real crisis within the EC is revealed? Since we pay 20·5 per cent. of the proposed 3·2 billion ecu, will we not be paying 600 million ecu


towards the reimbursement of our own rebate? Does the Minister hail that as a triumph for British diplomacy? On what principle are we being loaned a sum towards moneys which are due and have been owing to us legally since 1 January this year? Since those sums should have been paid on 1 January, what interest has already accrued and what interest is likely to accrue by the end of the year, after ratification by all the other member Parliaments, by which time we might at last receive our rebate for 1984?
Can the Minister confirm that even excluding that levy, the United Kingdom paid this session, by way of supplementary estimates, 800,000 ecu—which is not far short of the total rebate for 1984 which is due to us? Will the Minister confirm that there are bound to be further supplementary levies over the year which masquerade as loans?
The Minister is aware of our well-known support for the principle of including the Iberian countries in the EC. What lessons are there for the future when the EC cannot agree on a common negotiating position in respect of enlargement? Will not the problems of finding a common position be immeasurably increased once enlargement is agreed and the interests of two further countries have to be accommodated within a common programme?
At a time when the EC Foreign Ministers were haggling over the hectolitres of Spanish wine for distillation there was not a peep of protest about the massacre of blacks in South Africa and no consideration of an EC contribution to the famine in Africa. At a time of record agricultural surpluses and record unemployment within the EC and when the agricultural proportion of the budget at 74 per cent. is the highest ever and is unlikely to fall, how can the average citizen in the EC identify with an institution which manifestly does not identify with his or her interests?

Mr. Rifkind: The hon. Gentleman fundamentally misunderstands the position if he is suggesting that we are paying towards our own rebate. The 1,000 million ecus that is to be repaid to the United Kingdom is in respect of our contribution in 1984 and does not arise out of expenditure in the current year.
Under the Fontainebleau mechanism, we are to receive two thirds of the VAT share/expenditure share gap, which means that we will be paying 7 per cent. of additional expenditure, whereas France and Germany will be paying 27 per cent. to 32 per cent. of comparable levels of expenditure. Therefore, Fontainebleau remains an excellent deal for the United Kingdom, and far better than many dared predict. On the difficulties of reaching agreements in an enlarged Community, it goes without saying that a Community of 12 face such difficulties. However, during the years of its existence the Community has shown that, although it is difficult and time-consuming to achieve agreement between 10 or 12 democratic countries, at the end of the day it has always reached agreement, and that has contributed to the strengthening of the Community.
It would have been inappropriate for the Foreign Affairs Council to discuss the position in South Africa when it met last week. It is when the Council meets on political co-operation that developments in other parts of the world are considered. It would have been out of order for the

Council, as presently constructed, to deal with matters that were not directly related to work going on within the Community.

Mr. David Harris: Will my hon. Friend give the House some real information, rather than the bland remarks in his statement, about the position on fishing — especially in view of the importance of Spanish fishing opportunities off the south-west of England? Is the United Kingdom now prepared to agree to Spanish demands for an increase in the number of boats licensed to fish off the south-west coast? If so, will my hon. Friend take note that I shall oppose it?

Mr. Rifkind: I am sorry that I could not go into too much detail on fishing matters. I hope that my hon. Friend will understand that the negotiations are not yet concluded, so it is difficult to give the specific figures and details that he would like. The number of Spanish boats that will be permitted to fish in Community waters has not yet been finally resolved. I have every reason to believe that the agreement that we expect to be reached soon will be fully consistent with the protection of British interests and the interests of the fishermen whom my hon. Friend so ably represents.

Mr. Robert Maclennan: The Minister has spoken of there having been agreement on the general framework of a fishing agreement with Spain. Will he spell out that general framework and reassure some of the fishermen in Britain who are concerned about what has already been agreed?
In view of the difficulties that are obviously being encountered on agriculture, does the Minister believe that there is now any prospect of Spain and Portugal entering the Community this year?

Mr. Rifkind: On the first point, it is generally accepted by both the applicant countries and the existing member states that Spain and Portugal should be progressively integrated into the common fisheries policy, that fishing opportunities in existing Community waters should be based on their traditional involvement in those waters and that they cannot expect any significant change during the duration of the CFP unless there was a unanimous agreement to that effect at some time in the 1990s. 
The proposed date for Spanish and Portuguese membership of the Community is 1 January 1986. That does mean a somewhat tight timetable, but it is still possible to conform to that, especially if agreement is reached on most of the outstanding matters at the Council meeting due to be held this Thursday.

Mr. Hugh Dykes: In relation to wines and made wines, has the lesser but nevertheless important question of British sherry come up in the talks so far? Did my hon. Friend, or perhaps my right hon. and learned Friend, have a chance to put forward again the British case, not to harm Spanish interests but to preserve our situation in the derogation that has provisionally been agreed? If not, will my hon. Friend guarantee that that will be done as soon as possible in discussions with the Ministry of Agriculture?

Mr. Rifkind: The matter was raised. I am pleased to say that the Community's position, not just the British position, is that British sherry should be protected in the way that we have sought—namely, that there should be


not simply a temporary derogation but an open-ended ability to apply the present designation, as has been the case for about 100 years.

Mr. Eric Deakins: Is the Minister aware that the agricultural costs of the position of Spain and Portugal are likely to soar sky-high because of the way in which the Community is going about negotiating? Is he aware, from what he has told us, that the integrated Mediterranean programme for existing members of the EEC is being delayed while entry negotiations go on for agricultural agreements with Spain and Portugal? Is he further aware that, whichever comes first, existing producers will need to be protected against the consequences of enlargement through ever more costly programmes, producing more and more surpluses?

Mr. Rifkind: There is absolutely no question of integrated Mediterranean programmes being available to countries which are not yet members of the Community. There is continuing discussion about the appropriate provision for integrated Mediterranean programmes, and that matter will be discussed at the European Council next weekend.

Mr. Teddy Taylor: Were the press reports wrong in suggesting that, whereas at Fontainebleau we had a cast-iron, copper-bottomed guarantee of a £600 million rebate for 1985, before resources went up in 1986, the position now is that we shall get that rebate only if Britain and every other member state agree to increase the resources of the EEC? Does my hon. Friend agree that it would be shameful if there were such an increase in own resources at a time when the Common Market is spending £20 million every day on the storage and dumping of surplus foodstuffs?

Mr. Rifkind: My hon. Friend will be pleased to know that the British Government have made it abundantly clear that they could not contemplate an increase in own resources to take place unless the payment of our rebate for this year was absolutely cast-iron. There is no disposition on the part of any other member state of the Community to question that. In recent weeks, when discussions have taken place on a number of procedural matters, every member state has emphasised that great importance is attached by them to honouring the Fontainebleau agreement. At no time has it been suggested that any solution or procedure would be acceptable unless it ensured the payment to the United Kingdom of the sums agreed at Fontainebleau.

Mr. John Ryman: Has any progress been made in the discussions to protect textile interests in the United Kingdom? Is the hon. Gentleman aware that the biggest and most efficient textile factory in Western Europe is in my constituency — at Cramlington — and that because of the feebleness of the British Government and the lack of initiative by Common Market Ministers, far eastern and American imports, subsidised by those Governments, are flooding our markets, creating unfair competition to textile interests in Northumberland, resulting in the fear of substantial redundancies?

Mr. Rifkind: I share the hon. Gentleman's concern for the well-being of the textile industry. That subject was not on the agenda of the Foreign Affairs Council meeting last week.

Mr. Tony Marlow: Did the foreign Ministers discuss the dreadful situation in southern Lebanon? If so—but even if they did not—does my hon. Friend think it right that we should continue to allow access duty-free to Israeli manufactures while at the same time the Israelis are daily subjecting southern Lebanon to the most ghastly reprisal raids? Does he think it right that such trade arrangements should be permitted to continue before all Israeli troops—direct or surrogate troops—have left southern Lebanon?

Mr. Rifkind: That matter was not on the agenda last week. However, Israel and a number of other Mediterranean countries have association agreements with the European Community that enable them to have access to Community markets, and there is no proposal to discontinue that.

Mr. Nigel Spearing: How much preparation was made by the Foreign Affairs Council for the Heads of Government meeting at the end of this week? How will the reports of the ad hoc committees—the so-called Dooge and People's Europe committees — be handled? Are not those committees unrepresentative, being composed of unelected persons? Unless they are handled carefully, will they not produce legislation which is then rubber-stamped by the Heads of Government and sent to the Commission for the drawing up of regulations?

Mr. Rifkind: As the British representative on the Dooge committee, I somewhat resent the hon. Gentleman's description of the members as being unrepresentative or unelected. The Dooge committee has prepared its final report, which will be presented to the European Council. The other committee to which he referred has not yet prepared its final report, but it will be putting forward certain interim proposals. At its last meeting, the European Council announced that it intended to set aside two days for a full discussion of the recommendations at the June Council meeting.

Mr. Russell Johnston: What are the main outstanding issues in connection with enlargement, apart from fishing, which it is hoped to resolve on Thursday? On own resources, will the hon. Gentleman explain the Delphic expression
subject to a Greek waiting reserve",
which sounds somewhat ominous?

Mr. Rifkind: The points that it is hoped finally to resolve on Thursday, apart from fisheries, are concerned mainly with agriculture and social affairs, about which certain points of detail remain to be concluded. It is also hoped to have further discussion with the Spanish and Portuguese about the transitional financial arrangements affecting their accession to the Community.
As for the Greek waiting reserve, the Greek Government have made it clear that while they accept the proposals that have been put forward on the increase in own resources and financing of the Community's deficit, they could not give their final agreement until the Heads of Government had discussed, and hopefully resolved, the problem of integrated Mediterranean programmes and the proper level of resources for those programmes.

Mr. Max Madden: Does the Minister appreciate that there will be considerable dismay and surprise among many British people at the fact that the Community's relationship with South Africa was


considered inappropriate for discussion at the meeting? Will he undertake, on behalf of the British Government, to place that issue on the agenda of an appropriate meeting, because many British people want to see the British Government taking a lead on the matter within the Community?

Mr. Rifkind: The European foreign Ministers have on many occasions discussed southern Africa, including South Africa, at meetings devoted to political co-operation in the Community. I have not the slightest doubt that the matter will appear on the agenda in the near future.

Mrs. Ann Clwyd: When does the Minister expect to lay an order increasing our budget contribution by 40 per cent.? Will he confirm that, when that order has passed through this House, the Government will be enabled to raise our budget contributions without reference back to the House?

Mr. Rifkind: No date has yet been fixed for the presentation of such a proposal. Any increase in own resources can take place only if this House approves it; and, even if it approves it, it can take place only up to the level that has been approved by the House. Therefore, the implication of the hon. Member's question does not apply.

ENDURING POWERS OF ATTORNEY BILL [Lords]

Ordered,
That the Enduring Powers of Attorney Bill [Lords] be referred to a Second Reading Committee.—[Mr. Archie Hamilton.]

INDUSTRIAL DEVELOPMENT BILL [Lords]

Ordered,
That the Industrial Development Bill [Lords] be referred to a Second Reading Committee.—[Mr. Archie Hamilton.]

STATUTORY INSTRUMENTS &c.

Mr. Speaker: By leave of the House, I shall put together the two Questions on motions relating to statutory instruments.
Ordered,
That the draft Docks and Harbours (Rateable Values) (Scotland) Order 1985 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the National Health Service (General Ophthalmic Services) Amendment Regulations 1985 (S.I., 1985, No. 298) be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Archie Hamilton.]

Orders of the Day — WAYS AND MEANS

Order read for resuming adjourned debate on Question [19 March].

AMENDMENT OF THE LAW

Motion made, and Question proposed.
That it is expedient to amend the law with respect to the National Debt and public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;
(b) for refunding any amount of tax, otherwise than by a provision relating to the insolvency of a person to whom goods or services have been supplied;
(c) for varying the rate of that tax otherwise than in relation to all supplies and importance; or
(d) for any relief other than relief applying to goods of whatever description or services of whatever description.—[Mr. Lawson.]

Orders of the Day — Budget Resolutions and Economic Situation

[Relevant documents: European Community Document No. 10277/84, Annual Economic Report 1984–85 and the Unnumbered document Annual Economic Report 1984–85 (final version as adopted by the Council).]

Mr. Speaker: I remind the House that I have had notification of 27 right hon. and hon. Members seeking to take part in today's proceedings. I therefore propose to apply the 10-minute limit between 7 and 8·50 pm. I hope that Privy Councillors who may be called before that time will bear in mind that some of their colleagues may have a shorter period afterwards.

The Secretary of State for Trade and Industry (Mr. Norman Tebbit): As we commence this last day of the Budget debate I wish to re-establish some of the facts upon which opinions and policies are based. Clearly, we all share a common concern at the problem of unemployment and the problems of the unemployed. We are none of us unaware of the costs—in every sense—of unemployment. I have no doubts about the commitment of the Opposition to policies that they currently believe would reduce unemployment, although I hold that those policies are mistaken and would worsen our predicament, not improve it, as they believed throughout the time that they were in office.
For our part, while our commitment to the fight against unemployment is as strong as that of the Opposition, we have drawn different conclusions from the lessons of the past and developed different policies. That is quite understandable: however, it is a pity when the clear facts of our present position are misunderstood or misrepresented.
A theme of opposition speeches, particularly in the past week, and even more of Opposition catcalls, has been: "Recovery — what recovery?" Indeed, even my right hon. Friend the Member for Cambridgeshire, South-East (Mr. Pym) was far too modest about the Administration


in which he served so robustly for four years, let alone the achievements which have been built since then on the foundations which he helped so skilfully to lay.
My right hon. Friend said:
thank goodness we now have some growth. No one pretends that it is enough, and it still has not returned us to the level of output of 1979".—[Official Report, 20 March 1985; Vol. 75, c. 902.]

Mr. John Smith: Hear, hear.

Mr. Tebbit: The right hon. and learned Gentleman says, "Hear hear," but he is wrong as well. After a sharp dip in GDP from the second quarter of 1979 peak to the second quarter of 1981 trough, GDP was recovering well even by the time that my right hon. Friend the Member for Cambridgeshire, South-East left the Government. Indeed, the 1983 figure was above that of 1979. The rise has continued, with the fourth quarter of 1984 being 4·1 points above the second quarter of 1979 peak.

Mr. Roy Hattersley: Big deal.

Mr. Tebbit: It is all very well for the right hon. Gentleman to say, "Big deal." He and his right hon. and hon. Friends have been saying consistently that unemployment is in recession and that output is below the levels which we reached in 1979.
So we see an economy that has been growing since the second quarter of 1981, which is growing now, and which is forecast by everyone, except Labour Members, to continue to grow.

Mr. Hattersley: At a decreasing rate.

Mr. Tebbit: No, at an increased rate. The right hon. Gentleman has it wrong again. Indeed, it is growing well by comparison with other European countries.
Faced with the facts, the Opposition turn to their next favourite cry almost inevitably, which is, "It's all oil," as though no investment, or skill, or human, or material resources were needed to produce that wealth from the North sea and as though somehow it should not count. That would be as absurd as to suggest that digging coal is not an economic contribution, especially when it is carried out in an economic fashion.

Mr. John Smith: The Secretary of State said that the Opposition have misled the House in the comments that Opposition Members have made on the Budget. When he was challenged on investment decreasing in future, he said that that was not true. I refer the right hon. Gentleman to table 3.9 of the Red Book, which makes it clear that in 1985 investment is scheduled to increase by 2 per cent. instead of 6.5 per cent. and will drop to 1 per cent. in the first half of 1986. Surely that is correct. That information is in the Red Book.

Mr. Tebbit: I shall return to investment. I thought that the right hon. and learned Gentleman was referring to output, to which I was referring. As I have said, he is wrong on that. No doubt, as oil exports fall in the 1990s, the Labour Opposition of the day will decide that oil production and not manufacturing is the measure of our national standing.
So let us consider the figures. Gross domestic product—the measure of the nation's total output—is, as I have said, at an all-time peak. It is about 4 per cent. above its previous peak in real terms in 1979.

Mr. John Smith: With oil.

Mr. Tebbit: Exactly. The right hon. and learned Gentleman implies that oil should be excluded from these matters. That is a nonsensical suggestion. If we were to exclude oil, we might just as well exclude banking, other financial services, manufacturing, mining or quarrying. He must take the statistics and the facts as they are and not as he wants them to be.

Mr. John Smith: rose—

Mr. Tebbit: Very well.

Mr. John Smith: The Secretary of State should stop his heavy sighing. If he attacks the Opposition, he will be challenged on attacks that are falsely made. Are the Government saying that they are proud of an increase in output and claim credit for it if the bulk of the increase comes from North sea oil, which the Government did nothing to bring ashore?

Mr. Tebbit: The right hon. and learned Gentleman must understand that the Government do not produce the bulk of wealth in the United Kingdom in any vent. Private enterprise does that and private enterprise was predominant in extracting wealth from the North sea.
Total business investment grew by 12 per cent. in 1984 and is also at an all-time real peak. Moreover, the recovery, which is already the longest sustained period of upturn in the United Kingdom since the second world war, is far from over. The forecasters — perhaps the 364 economists and their satellites on the Opposition Front Bench are to be excepted — are predicting continued buoyant growth throughout 1985, probably up to about 3·5 per cent.
I remind the House that the United Kingdom led Europe out of the recession — [Interruption.] Would Labour Members like the figures, the dates, the times of the troughs and the time of the recovery? I shall place them in the Official Report if that will help them.
Last year, despite the miners' strike, which took about 1 per cent. from our growth rate, United Kingdom growth is still expected to have been close to the European Community average, and in 1985 forecasters are once again expecting the United Kingdom to head the European Community growth league.
Of course the Opposition deplore at length the difficulties of the manufacturing sector. Let us look a little harder at that. Overall, manufacturing industry output fell sharply from its 1978 peak of 109·8 to a trough of 93·9 in 1981 and in 1984 it was back up to 100·2. Within the general category of manufacturing some sectors are still in decline while others are pushing strongly ahead.
Of course, Labour party thinking is governed by the block votes of trade unions — [Interruption.] If we observe the Labour party conference we know that it is governed by the block votes of the trade unions. Labour Members might not like that, but they must put up with it.

Mr. John Prescott: There is no thinking allowed at a Tory conference.

Mr. Tebbit: We manage our conferences quite easily and skilfully. The hon. Gentleman had better try it himself. The block votes of the trade unions govern the Labour party conference and the industries which count are the heavily unionised and dominant employers of the past, not the less unionised and growing industries of today and tomorrow.
The growth of some manufacturing sectors has been dramatic. Output of office machinery, including electronic data processing equipment, has risen by 182 per cent. since the manufacturing recession trough in the first quarter of 1981. Electronic consumer goods output has grown by 35 per cent., agricultural chemicals by 29 per cent., plastic products by 25 per cent. and pharmaceutical and consumer chemicals, industrial chemicals, electronic industrial goods and electrical consumer goods all by 21 per cent. All those sectors are now producing at record levels. The recovery in manufacturing can be seen in the improvement of export performance.

Mr. David Winnick: Is the Secretary of State aware that his sneers a few moments ago were an insult to the Labour party and to the west midlands, which has been devastated over the past five years as a result of Government policies? Unemployment in 1979 was 5 per cent. in the west midlands and it is now well over 15 per cent. In some places it is well over 20 per cent. Areas such as Darlaston in the black country have become industrial wastelands. When is unemployment likely to be reduced?

Mr. Tebbit: I shall come to unemployment. In the meantime, there is no question of insulting the west midlands. I do not even insult the Labour party. I have merely stated the facts about it. If the facts are insulting, that is a pity, but that is the way life is.
Since the end of 1983, manufactured exports have been rising strongly; and by the end of 1984 this expansion had turned into what might almost be called a surge. In the final quarter of 1984 the volume of manufactured exports was 15 per cent. higher than a year earlier and 13 per cent. higher than the previous quarter. Manufactured export volumes are now running at over 10 per cent. above their previous peak. This may come as news to the Opposition, who pretend that it is not happening. Investment volume in manufacturing rose sharply by 13 per cent. in 1984, and a further 7 per cent. real increase is predicted for 1985 by our investment intentions survey. There has been a remarkable improvement in manufacturing productivity, even though the hon. Member for Warrington, North (Mr. Hoyle) believes that
there has been no recovery
and that
productivity is no higher now than it was six years ago."—[Official Report, 20 March 1985; Vol. 75, c. 904–5.]

Mr. Winnick: So all is well.

Mr. Tebbit: The hon. Gentleman must not say that. I have made it plain that all is not yet well. I am trying to explain the basic economic facts, which the hon. Gentleman does not want to recognise.
By the last quarter of 1984, output per head in manufacturing was 28 per cent. above its trough in 1980 — an average growth of 6·5 per cent. for four years. Productivity performance remains strong, with an increase of 4·5 per cent. in 1984. Since 1979, output per head in manufacturing has increased by about 3·5 per cent. a year compared with 1 per cent. in the period of the previous Labour Government.
There are dangers, of course. Wages here have been rising recently far faster than in Germany, the United States or Japan, and our unit labour costs have been running ahead of theirs. No doubt that is why the right hon.
Member for Birmingham, Sparkbrook (Mr. Hattersley) has committed himself so firmly to controls on incomes and a formal wages policy of some type worked out with the trade unions. No doubt for the same reason, the alliance parties have committed themselves to similar policies. If that is allowed to continue, we would soon fall back to the sorry tale of past failures. With rising output, exports, investment and profitability, it is hardly surprising that business confidence and export optimism in the CBI's industrial trends survey remain strong.
Naturally our attention during these debates has turned time and time again to unemployment. Of course, because our concern is for those without work, we look at unemployment, but to see what is happening in the economy we might be advised to look at employment too.

Mr. Winnick: The right hon. Gentleman cannot sleep at night because of unemployment.

Mr. Tebbit: The hon. Gentleman would be better employed sleeping somewhere if he cannot keep his mouth shut for two minutes at a time.
Our employment peak was 1979, when the annual average figure — [Interruption.] The hon. Gentleman should listen and he could learn something. Our employment peak was 1979, when the annual average figure was 24,799,000. The trough was in 1983, when the annual average figure was 23,124,000. In fact, the trough quarter was the first quarter of 1983. My right hon. Friends knew, when we were returned at the 1983 general election, that employment was already growing in the economy. Since then, the number of those in work has been rising and the 1984 figure—although this is not yet finalised—looks to be about 23,450,000. Yes, it is still 1,300,000 down from the peak but over 300,000 above the trough on an annual basis and some 480,000 above the trough on a quarterly basis.
So the picture is not of an economy in decline, but of one that is expanding. It is an economy not in which jobs are being destroyed or lost overall, but in which they are being created overall.

Mr. Winnick: Oh, no.

Mr. Tebbit: If the hon. Gentleman cannot add and subtract, he had better go out and start to learn simple arithmetic. In other words, the truth about the economy is almost the opposite of what the Labour party is saying. Indeed, it is the opposite of what the leader of the Liberal party so slily implied when, in his Budget broadcast on 21 March, he said:
Is there no alternative to the continuing contraction of British industry?
What weasel words. He did not actually tell a lie, but he implied a lie in his question. Industry is not contracting; it is expanding. The answer to the right hon. Gentleman's question is, yes, there is an alternative to contraction—it is expansion and that is what the policies of my right hon. Friend the Chancellor are already bringing about. Of course, the increase in jobs is not yet sufficient to arrest the rise in unemployment, but I hope that hon. Members will this afternoon conduct a debate on the basis of realities and no imaginings, although I begin to despair already from what I have heard from the Opposition.
No one pretends that everything is perfect. When I spoke in the Budget debate last year, it was against the background of falling interest rates and cuts in mortgage rates. No doubt the right hon. and learned Member for


Monklands, East (Mr. Smith) will make the obvious point that interest rates are now higher than they were a year ago, although they have begun to fall again. But why did interest rates rise? It was because of higher public borrowing and spending resulting from the miners' strike, which the right hon. and learned Gentleman and his colleagues did so much to sustain, and because of the surge in the value of the dollar against all other major currencies.
Who is more likely to bring interest rates down again — a Government committed to further reductions in PSBR and Government borrowing, or one committed to an enormous increase in borrowing and spending?

Mr. Winnick: How many more pages does the right hon. Gentleman have?

Mr. Tebbit: Plenty more. The hon. Gentleman will get through them much faster if he manages to keep quiet for a minute or two.
It is fair to say I have had another disappointment since last year. The scheme of assistance to the textile industry —CLOFT— has not been implemented, because it has been turned down by the Commission. That was hard to accept after past approvals for large aid schemes for these industries in other member states.
I have made it clear to the Commission that we expect this new and stringent policy for these industries to be applied without exception throughout the Community. The Commission has confirmed that this is its intention.
To ensure that there is no accidental leakage through this dam on state aids for such industries, I hope to enlist the support and help of the CBI and TUC. I have therefore asked them to report any instances in other member states that they believe are suspicious; I have instigated a trawl for further information from our embassies in the capitals of other member states; and I am actively seeking any information on such transgressions elsewhere.
Perhaps here is a constructive and patriotic role for investigative journalism. If there is to be a strict regime, let it be applied with equal force throughout the Community.

Mr. Max Madden: As the right hon. Gentleman is referring to the textile industry, he will know of the widespread concern within this industry about the future of the multi-fibre arrangement. Will the right hon. Gentleman take this opportunity to reassure the industry and the House that the British Government are firmly committed to the renewal of the MFA?

Mr. Tebbit: We shall come to these issues before long. I hope that we shall debate them more generally. When the Government have fully considered and concluded their policy towards the renewal of the MFA, I shall be happy to make a statement about it.
I should make it plain that I do not wish to claim the improvement in the economy as the exclusive achievement of Government. It is, above all, the achievement of commerce and industry and workers from boardroom to shopfloor. Our main contribution is to set the framework. There are specific things we can do beyond that. Science and technology and their effective use are central to wealth and job creation. In more mature industries and in the new high technology industries alike, we need to accept and exploit the benefits that technology brings.
Last Tuesday my right hon. Friend the Chancellor announced three additional important tax measures to

encourage research and development and innovation: first, scientific research allowances are to remain at 100 per cent., to recognise the risks involved. Secondly, capital allowances announced in last year's Budget are to be refined to allow, from April 1986, short-life assets to be written off for tax purposes over their commercial life. Thirdly, the business expansion scheme is to be extended to include research and development companies — precisely the type of high-risk, high-tech company that the generous personal tax relief of the BES was designed to assist. Those are the improvements in the macro-framework for research and development. We are also introducing a number of measures designed to ensure that my own Department's support for innovation will be more precisely targeted to ensure that it achieves more effective improvements in British technology.
On 12 November last year, my hon. Friend the Minister for Information Technology announced a review of the Department's general industrial support for research and development. I can today announce the results of that review. I have concluded that there should be a change of emphasis in our support. I intend to increase the proportion of aid going on advisory services, the encouragement of best practice, improvement in the supply of key skills, and collaborative research. Support in those areas should help improve the capacity of a wide range of companies to exploit technological opportunities.
It is for individual companies themselves to bear the primary responsibility for projects near the market, and with the increasing company profitability they are now better placed to do so. I know that the right hon. and learned Member for Monklands, East is dismissive of profits — he talks of corporate tax savings being "frittered away" in profits. [Interruption.] If the right hon. and learned Gentleman's memory fails him, I remind him that he said that in column 529 of the Official Report on 15 March 1984.
Personally, I welcome the recovery in profits which enables me to reduce the proportion of the Department's support that goes on such projects. The criteria for assistance under our support for innovation programme, which will be open to new applicants from 1 April, will accordingly be focused more sharply than before.
Our aim is to concentrate support on innovative projects that represent a significant advance for the industry or sector concerned, taking into account the degree of innovation, the degree of technical and commercial risk involved, the potential for market exploitation, and any wider industrial benefits. Products and processes that represent merely a small step forward, needed primarily to keep up with the competition in the United Kingdom, are unlikely to be supported. In line with that, the normal minimum project size will be increased to £100,000. But to help small firms, we shall continue to provide support to them for projects below the £100,000 limit. As in the past, they will also benefit from simplified administrative procedures and less stringent eligibility criteria.
Within those general arrangements, we shall continue to emphasise certain key technologies and their application, such as micro-electronics, fibre optics and computer software. Some key technologies will also continue to qualify for support in respect of investment projects under the Industrial Development Act. Support for aircraft and aero-engine research and development will also continue, but at a reduced level.
I am also taking this opportunity to bring into effect a regrouping of the Department's assistance schemes, which I first announced last July. All the schemes will be presented under just four main groups: support for business and technical advisory services; support for innovation; support for national and regional investment; and support for exports.

Mr. John Smith: With regard to support for innovation schemes, in the forthcoming year does the Secretary of State anticipate an increase in Government expenditure to support those schemes or a reduction?

Mr. Tebbit: There will be less expenditure in real terms. That, of course, is as it should be. The Department of Trade and Industry is not established as a mechanism for handing out taxpayers' money to profitable industry, and as industry becomes more profitable, so it should carry the burden of those activities more and more itself.
My aim is to offer a more helpful and more readily comprehensible service to industry and commerce. With improving profitability, improving prospects and a more helpful tax regime, companies are able to afford to do more. That is in line with the views of the right hon. and learned Gentleman himself. He has expressed the view that he is not very keen on grants and that — [Interruption.] Yes, indeed. I should like to quote from The Guardian — and that is pretty good — of 22 February—

Mr. John Smith: But I agree.

Mr. Tebbit: Oh. Fine. We are in agreement, then, that we should have more profitability, better tax arrangements and fewer grants. So the right hon. and learned Gentleman and I are on absolutely the same side.
I am determined to ensure that the Government spend taxpayers' money only where it is most likely to bring forward new technology or new developments that would not otherwise have occurred. The ability of industry to compete is governed by the quality and skill of our work force. Even now we have grave skill shortages in some sectors—

Mr. Prescott: It was the right hon. Gentleman who abolished 16 of the 23 industrial training boards, with the collapse of apprenticeships.

Mr. Tebbit: Indeed — in order to improve the standard of industrial training.
If those skill shortages persist, we shall miss the opportunities offered by the fastest growing industrial sectors.
A committee, chaired by my hon. Friend the Under-Secretary of State for Trade and Industry, has been looking at those problems. That committee, the IT skills shortages committee, has reported on the shortages of graduates and technicians, and the importance of forging a partnership between industry and the education system. It is for industry to define its skills requirements; the education system must then respond rapidly to industry's needs.
Industry has already committed itself to providing finance, teaching manpower and equipment. It has set up the IT skills agency, alongside the CBI, to co-ordinate industrial contributions to help solve the problems of IT skills shortages.
We are determined to respond particularly to the need for more graduates in engineering and technology. My right hon. Friend the Secretary of State for Education and Science announced last week that £43 million will be available over the next three years to provide additional places for engineering and technology in higher education institutions. A number of Departments — not least my own — are contributing towards the cost of that initiative, which complements the commitments that industry is making. That is a mark of the importance that we attach to solving the problem.
But if industry is to expand, the Government themselves must not clog up the works, impede progress or stifle initiative. There has been a growing recognition, not only in this country but elsewhere, that compliance with Government requirements imposes real and significant costs on business. Last year we announced a review of administrative and legislative requirements in seven Departments of Government. The scrutiny team's report will be published on Friday this week. It identifies options for action to cut burdens in all the main areas of regulation. It calls for a centrally co-ordinated drive to achieve a balance between costs and benefits in enforcement; to improve communications with business, in central Government and local authorities alike; and to control the growth of regulation in future, in the European Community as well as at home.

Mr. Eldon Griffiths: My right hon. Friend is showing most welcome concern about compliance costs. Will he say in broad terms whether compliance costs in the United Kingdom tend to be higher or lower than those of our principal competitors?

Mr. Tebbit: It is difficult to say, but I would imagine from all the evidence that our compliance costs are considerably higher than, for example, those in the United States. It is difficult to compare like with like because systems are often so widely different. What I know, and what the report makes plain, is that there are real compliance costs here, and we should do something to reduce them.
We are publishing that report in advance of Government decisions on most of the options that it identifies. In some areas—on value added tax, wages councils and unfair dismissal law—action has already been announced. Of course there should be a framework to protect employees, consumers and the public as a whole, but that must not impose such a load as to damage the interest of those very groups.
There is another way to help industry. It is to liberate our nationalised industries from the restriction and interference that are an inevitable consequence of state control. We have made remarkable progress in the past year, not least with British Telecom. But there is still much to be done.,
I am therefore pleased to be able to tell the House today of a further step in reducing state ownership. Last summer I asked British Shipbuilders to dispose of its warship building interests, to make substantial progress by 31 March this year, and to complete the process by 31 March 1986. I am pleased to say that I have today given my consent to British Shipbuilders for the sale of Yarrow Shipbuilders Limited to GEC. British Shipbuilders will receive almost £34 million for Yarrow by way of cash consideration, dividend and a payment in due course for


group tax relief. This is an excellent start to the process of returning the warship yards to the private sector and it is an encouraging comment on our economic policy that a company such as GEC, which has sometimes been criticised for sitting on a cash mountain rather than investing in industry, has decided to invest in shipbuilding. I am not sure whether I have to congratulate my right hon. Friend the Member for Waveney (Mr. Prior) on these matters, but it is a most welcome investment. I hope that other sales will follow before long.
Last year, the Opposition spokesman on the last day of the Budget debate was the right hon. Member for Bethnal Green and Stepney (Mr. Shore), then the Opposition spokesman on trade and industry, whose retirement from active politics we all understand and regret. At column 721 of the Official Report for 19 March 1984 he said:
It would be absurd if we left the judgment of this Budget to the City columnists and Stock Exchange dealers. The major tests we should apply are threefold. First, will the Budget improve the competitiveness of the United Kingdom economy? Will that competitiveness be expressed in our greater ability to prosper in trade with other nations and thus sustain a favourable balance of payments? Secondly, will the Budget lead to a sustained growth of output? Thirdly, will it make an impact on the appallingly, wasteful and socially disastrous total of 3½ million unemployed" —[Official Report, 19 March 1984: Vol. 56, c. 721.]
Those were the tests which the right hon. Gentleman wanted to apply. Let us apply them. Sadly, unemployment has continued to rise—

Mr. Prescott: Sadly!

Mr. Tebbit: Is the hon. Gentleman not sad about it?

Mr. Prescott: It is deliberate policy.

Mr. Tebbit: The hon. Gentleman is offensive and downright stupid. Any Government who set out deliberately to increase unemployment would be signing their death warrant. Governments do not do that.

Mr. Prescott: The right hon. Gentleman has.

Mr. Tebbit: As I said, the hon. Gentleman is offensive and stupid. The sooner he learns a little about the need for courtesy and some common sense, the better.

Mr. Prescott: The right hon. Gentleman is the pole cat.

Mr. Tebbit: Sadly, unemployment has continued to rise, but the first step towards checking and reversing that increase has clearly been taken. The number of jobs in the economy is increasing, as is the number of people at work.
Secondly, the Budget led to a sustained growth of output. That growth was less than we had hoped. We all know that it was due to the coal strike, which was supported by the Labour party which lacked the morals and guts to stand up and support the majority of the miners, but crawled along behind the Scargillite minority.

Mr. Prescott: Was it a good investment for the right hon. Gentleman, then?

Mr. Tebbit: It was a good investment for the nation that that strike was defeated.
The same is true for the balance of trade. Despite the effects of the coal strike, we maintained a balance of payments surplus for the fifth year running. That is the longest run of balance of payments surplus since the end of the second world war.

Mr. Peter Shore: The right hon. Gentleman has quoted from my reasonably

impressive and well measured remarks of one year ago. Will he tell us what was the balance of payments surplus last year and what it was in 1983?

Mr. Tebbit: I shall happily look the figures up for the right hon. Gentleman. [HON. MEMBERS: "Ah."] I know what point the right hon. Gentleman is making, but he used balance of payments as his criterion. I am using balance of payments as mine. The right hon. Gentleman knows that the position deteriorated and that the prime reason for that was the coal strike of which he was such an enthusiastic supporter. On the Opposition's own test for last year's Budget, my right hon. Friend the Chancellor's judgment was right and his success would have been the greater but for the Scargillite wreckers and their craven allies on the Opposition Front Bench.
Today, despite temporarily high interest rates, industry and commerce is optimistic, confidence is high and prospects are good. There is no shortage of demand in the economy, and it is for British business to satisfy that demand, thereby increasing the number of jobs available.
In this Budget, my right hon. Friend has again acted to help business improve competitiveness, create more work and employ more people. It is a Budget that I am glad to commend to the House.

Mr. John Smith: I suppose that the kindest thing I can say about the Secretary of State's speech is that it was delivered with the usual amount of charm. For the right hon. Gentleman, it was a remarkably defensive speech. It bore all the remarks of careful preparation during the past couple of weeks—of private offices sculling through every selective statistic that could be found and through a mound of press cuttings—to see if the right hon. Gentleman could paste together some apologies to be offered to defend his stewardship of trade and industry.
The statistics were culled on the basis that if a quarter was suitable, a quarter was taken, when it was better to take a year, a year was taken, when there was a suitable reference to the EEC, the EEC was taken and when reference to the OECD was more suitable, the OECD it would be — all of which adds up to an unconvincing picture. The right hon. Gentleman lacked conviction in the ritual peroration with which he finished his speech.

Mr. Tebbit: Will the right hon. and learned Gentleman answer one simple, straightforward and unselective question? Is the number of jobs in the economy increasing and is gross domestic product increasing?

Dr. Oonagh McDonald: There has been an increase in part-time jobs.

Mr. Tebbit: If I were the hon. Lady, I should not quibble about part-time jobs, especially for women. She will get into trouble, especially with the Leader of the Opposition.

Mr. Smith: The original part of that was a question. I can tell the right hon. Gentleman straight that the number of part-time jobs has increased, but, unfortunately, the number of full-time unemployed has increased at the same time. Gross domestic product has increased—

Mr. Tebbit: Ah!

Mr. Smith: The right hon. Gentleman asked me a straight question. He got a straight answer, and it is too


bad if he does not like it. He must listen sometimes, especially when he strays from the land of prejudice into that of fact—countryside with which he is less familiar. Going back to 1979—

Mr. Tebbit: What about GDP?

Mr. Smith: I shall deal with that in a moment, and I shall give the real figures of the peaks and troughs of the Government's achievements. I also have something to say to the Chancellor on that matter.
That is all a far cry, is it not, from the happy days of 1979 when the Thatcher Government were returned with some new and interesting economic propositions? We were told that the Labour Government, with unemployment at 1·3 million, had failed the nation and working people. We bear it in mind that if we apply the calculation of unemployment that the Government use, that figure would be nearer 1 million. We remember the then Leader of the Opposition excoriating the Government for the youth opportunities scheme. The right hon. Lady said that she was not interested in those jobs but only in real jobs. That is what we had to suffer when in government.

Mr. Tebbit: There was no youth training scheme.

Mr. Smith: There was a youth opportunities scheme. I think that the right hon. Gentleman can hear quite clearly and that he heard youth opportunities scheme mentioned then. If he cannot hear clearly, perhaps he will listen a little more attentively.
Three propositions were to mark the new dawn of Conservative economic policy. First, if the money supply was controlled, that would ipso facto control inflation. Secondly, cuts in public expenditure would lead to increased investment in the economy because of the ending of the so-called "crowding out" theory. Thirdly, cuts in personal taxation, especially for higher earners, would galvanise the crucial entrepreneurs who would reinvigorate the economy.
Why, in the whole of the right hon. Gentleman's speech, did we not hear a reference to any of those three propositions, which were reckoned to be crucial for Britain's economic recovery? The truth is that six years later, two thirds of the way into a two-term period of office and ominously near the next general election, the economic policies have not worked.
Until now the Government have usually taken one of two courses when challenged whether the new policies would be successful. The first line that is occasionally adopted is that all is not well. The Government candidly confess to that, but say that it is not their fault; it is that of the Labour Government, trade unions — that is the favourite—the world recession, sometimes of President Reagan and occasionally of bishops and academics. The other policy, which the right hon. Gentleman chose to follow today, is to claim that all is well, the economy is doing sparklingly well, and that with sufficient selected statistics they can persuade a baffled nation, which apparently does not understand as clearly as it should, that we are doing well.
All the Ministers who have spoken in the Budget debates, including the Chancellor of the Exchequer, indulged in that tactic, which makes me think that it was probably predetermined. The phrases recur from one

speech to another. They spoke of the fifth year of economic recovery. They did not mention peaks and troughs, but they implied that this was the fifth year of continuous economic recovery. The Secretary of State for Employment spoke of the most sustained economic recovery for 40 years, which the Secretary of State for Trade and Industry repeated almost word for word today.
In Newcastle, at the weekend, the Chancellor of the Exchequer said that 500,000 jobs had been created during the past two years. It is relevant, and of assistance to a nation puzzled about whether it is doing well, to point out that the vast bulk of them are part-time jobs. No reference was made to the increase in unemployment, except by the Secretary of State for Employment who, in his Budget speech, said that the decrease in unemployment had not yet been enough, and thus implied that a little patience was all that was required.
We shall examine the true figures about our economic position. Last year — 1984 — is the first year when investment reached its 1979 level. As the right hon. Gentleman well knows, it is predicted to increase by only 2 per cent. in 1985 and by 1 per cent. in the first half of 1986. The Chancellor of the Exchequer said that manufacturing output had increased by 3·5 per cent. However, it remains 9 per cent. below the 1979 level.
Most ominously of all, although the right hon. Gentleman talked about the increase in exports, no word was uttered about the increase in imports. What sort of presentation of our trading position to the House and the nation deals with an increase in exports but does not mention imports? That is one of the most revealing examples of the selective use of economic statistics. How a responsible Minister can come to the House with the effrontery to expect it to accept such a presentation defeats the imagination. The ominous truth about our balance of trade is that we had a £4 billion deficit on manufactured goods in the past year. If an honest account were given of the Government's performance, that statistic would have fallen from the right hon. Gentleman's lips. He did not mention the increasing import penetration into the United Kingdom.
The truth about the right hon. Gentleman's statistics, like those which we have heard throughout the debates and which during the next year we shall hear ad nauseam, is that, where there are percentage improvements, they are usually only on the Government's own worst performance. The British economy is in difficulties. Hon. Members, objective commentators who look at our condition, and people whose eyes are open and travel round the country, know that the decay has gone far, especially in our industrial areas. Yet the Government have had the benefit of North sea oil revenues.
It is the fashion to anticipate the attack about North sea oil, as the right hon. Gentleman did. However, North sea oil cannot be abstracted from the economy any more than banking or other sectors of economic activity. That is a simplistic view for the right hon. Gentleman to take because he knows what North sea oil has meant to the Government. The Labour Government, who did more than this Government are doing to ensure that oil came on stream on time, received about £600 million in North sea oil revenues. This year the Government will receive £12,000 million in North sea oil revenues. By the time they complete their period in office, they will have received between £70,000 million and £80,000 million. No Government this century have had a windfall of such


proportions with which either to increase public expenditure or to diminish taxation. No Government have had such massive assistance to help with the balance of trade or the balance of payments. We must always remember that enormous windfall benefit when we assess this Government's performance against that of previous Governments and our competitor nations. We do not intend to let Conservative Members forget that. They have had a windfall benefit and spent every penny piece of it on paying for the extra unemployment that has been created since they came to office in 1979.
When our history comes to be written, there will be great puzzlement why a nation which received such an enormous benefit decided to create circumstances to consume it in payments for human misery rather than to invest it in retooling and re-equipping industry and putting the nation into a better state. That is the Government's record, and it is uncreasingly understood by the public.
What does the Budget do to help?

Mr. Tebbit: Before the right hon. and learned Gentleman leaves that point, will he tell us whether he accepts that the economy is expanding, that the level of output is higher than ever before and that that expansion is set fair to continue?

Mr. Smith: Output is increasing, but in nearly every year this century output has increased on the year that preceded it. That puts the statistic in a less important light. It would be odd if that were not so. What makes the Government's history useful to them is that they brought us so low between 1980 and 1982, that it is hardly surprising that figures are slightly better in 1983 and 1984. I wish that the right hon. Gentleman had got to his feet and told us that we did not have to worry about the £4 billion deficit on our balance of trade in manufactured goods. He did not mention that in his speech, and I doubt whether he will interrupt me on that subject.
It would be fair to judge the Budget in two ways: what it does to improve employment and achieve more jobs, and what it does to reverse our industrial and economic decline.
Regarding jobs, the Chancellor advertised the Budget as a Budget for jobs, and told us how worried he was about unemployment. He used the word "evil" on one occasion and "scourge" on another. We take it that the Chancellor of the Exchequer, like the right hon. Gentleman, wants us to believe that he is genuinely worried about unemployment, deeply sad that it has reached these proportions, and anxiously casting his mind for ways to reduce it. We must wonder about the Chancellor who, according to The Observer on Sunday, told the Washington Post last December:
economically and politically Britain can get along adequately with double-digit unemployment.
Is that the statement of a man who cares deeply about unemployment? The House should note the word "politically". The Chancellor does not deny it. That comment was published in an authoratitive newspaper. I take it from the fact that he does not deny it, that it is true. It is interesting that members of the Administration reveal the truth in America more often than in the United Kingdom.

The Chancellor of the Exchequer (Mr. Nigel Lawson): The right hon. and learned Gentleman is getting carried away. The gentleman from the Washington Post

who came to see me got in slightly garbled form what I had said, which was simply that, despite double-digit unemployment, the economy was going ahead rapidly and we had succeeded in winning the previous general election with a large majority. I went on to tell him that, nevertheless, the Government were deeply concerned about unemployment and were doing all they could to try to reduce it.

Mr. Smith: I have some experience of criminal law, and, on the basis of what the Chancellor said, I find him guilty immediately. That was not the convincing denial of a man who had been grossly misquoted. What an elaborate, confused explanation. No doubt when the Chancellor saw the article in the Washington Post, he wrote immediately to correct this misapprehension. He was not worried, because it was the sort of misapprehension that he did not mind being known about in America. But an alert reporter discovered it, and now we know about it in Britain. The message must be spread, because it is the truth, that the Government's political assessment is that they can get away with the present level of unemployment. The truth is that the Government have no priority for reducing unemployment and that high unemployment suits their political strategy.
If Conservative Members do not like that accusation—it is an accusation which events have forced us to make—let them tell us why, in Budget after Budget, the Government have resolutely turned away from any steps to reduce unemployment. This is not the first Budget in which a wide range of opinion has asked for a modest public sector works programme, organised selectively, to get a few hundred thousand construction workers back to work and to improve our decaying social fabric. It is not just the Opposition who ask for that. As Ministers will know, many Conservative Members—I see them as I look round the Chamber and they always attend such debates—have urged that course upon the Government. It cannot be a devious Socialist manoeuvre if it comes from such respectable advocates.
We also know that there has been no shortage of suggestions put to the Chancellor for stimulating the economy and increasing demand. If the Secretary of State believes that there is no problem with demand, he should visit all the companies which have had to lay off workers because there is no demand for their goods. I hope that he will visit the factories that are producing at 50 per cent. of production and having to lay off workers and tell them, "It does not matter. There is plenty of demand in the economy, and you should know it. That is why you are selling so well." But the Government have spurned every course that they could have taken to reduce unemployment, and even in this Budget the reduction of unemployment is not a high priority. The public are becoming increasingly aware of the truth. They are becoming aware that the misery of unemployment, which affects their families, children and communities, is avoidable and that the Government are pursuing their policies relentlessly, disregarding the social misery that unemployment has brought to our community.

Mr. Richard Page: How does the right hon. and learned Gentleman square the lack of demand with the huge amount of imports that he says is coming into the country? His argument does not jell.

Mr. Smith: It is too simple to say that if imports are increasing, there is no problem with demand. It is more complicated than that. [HON. MEMBERS: "Ah!"] Of course it is. If there is greater demand in the economy, it offers an opportunity to domestic producers and to importers; but a larger overall demand must give a better opportunity to our producers, unless we are so unconfident about their capacity to compete that we dare not increase demand because imports will take it all up. It is an interesting comment on the present state of industry that we are so unconfident about it that we dare not increase demand.
When will it be safe to expand? Will there come a day when the Government can have a public sector programme? Will there come a day when we can again aspire to economic growth without the fear of inflation? Of course there will. The Government know full well that there is sufficient slack in the economy to increase demand significantly and to have a considerable injection of public expenditure without a substantial increase in inflation.

Mr. Tebbit: Have not the right hon. and learned Gentleman and his colleagues consistently made the case recently that we should have not tax cuts but infrastructure spending? The right hon. and learned Gentleman is afraid that if people had more of their own money to spend, they might be so wicked as to spend it on a holiday abroad or on imported goods. He, not the Government, is saying that he does not have confidence in the ability of British industry.

Mr. Smith: The right hon. Gentleman's intervention did not have much to do with what I was saying, but I am happy to answer it. Has not the Secretary of State grasped by now that the case which many people, not just the Labour party, have made for spending on the infrastructure is that money spent in that way will create far more jobs than will money given in tax cuts? There is a heavy body of evidence to that effect. Since we regard the reduction of unemployment as the highest priority, we naturally advocate that course. The money to spend that the right hon. Gentleman talks about is not available to the entire community. As he knows, many people have not done well out of the Government. If they get a minor cut in taxation, it is soon swallowed by increased gas or electricity prices, prescription charges, or mortgage interest rates. The Secretary of State's suggestion that the miners' strike caused the increase in interest rates will occasion much surprise, but, of course, the miners' strike must be fitted into every problem. It is the best scapegoat of all. According to the Secretary of State, it was responsible simultaneously for the balance of payments problem and for high interest rates.
The Secretary of State knows that the Government are not concerned about reducing unemployment, or they would have taken steps to do so. Instead, they are pursuing and adding to unemployment by trying to introduce a low-wage economy. They started with the abolition of the fair wages resolution and the repeal of the 11th schedule to the Employment Protection Act 1975. Now we are told that jobs will be created by allowing employers unfairly to dismiss people within the first two years of employment. What an absurd irrelevancy. What does allowing an employer unfairly to dismiss someone have to do with creating jobs? What does the abolition of the wages councils have to do with the creation of more jobs? As my hon. Friend the Member for Kingston upon Hull, East

(Mr. Prescott) said in a debate last week, it is to the shame of Britain that, alone among the 94 countries which signed the ILO convention, it proposes to renounce its obligations under it. To try to drive down further the wages of people who have been regarded by all parties over a long period as in need of special protection is an especially pernicious way of trying to put the responsibility for our economic problems on people who were not responsible for their creation.

Mr. Winnick: Is it not even more nauseating to consider that the campaign to abolish the wages councils has been run by the most prosperous business men in the Conservative party?

Mr. Smith: As my hon. Friend says, during the debates on the Budget, when an hon. Member has advocated cutting wages or abolishing the wages councils, attention has been drawn by one of my hon. Friends to his entry on the Register of Members' Interests. That will tell a great deal to those who listen to and read our debates.
One would have thought that workers needed little protection nowadays. Indeed, many Conservative Members believe that they should be grateful to have jobs at all and should behave accordingly. Let me tell the Secretary of State for Trade and Industry, who was Secretary of State for Employment for some time, that workers are being exploited. The drive for low wages during a period of high unemployment is causing injustice.
I quote to the right hon. Gentleman the case of Gary Leadbeater, a 17-year-old who lives in the new town of Washington. His case was discovered during a low pay campaign in the north-east. He works as a trainee carpet cleaner, and is paid £33·99 for a 45-hour week. He is paid that sum deliberately. Were he paid £34 a week, his employer would have to pay £4 in national insurance. Until it was abolished in the Budget, the employer received a subsidy of £15 a week from the Government under the young workers scheme. The employer skipped out of the national insurance obligation and got a £15 subsidy, but that boy had to work regularly every weekend because his contract of employment was such that he was obliged to work whenever his employer worked.
It is a scandal that exploitation on that scale should be permitted. These people are vulnerable. In any civilised community, they would be protected, and any civilised Parliament would seek to protect them. People such as Gary Leadbeater will be thrown to the wolves by the abolition of the rights that have been fought and won for them over many years.
We looked at the Budget and saw tax cuts again being given to people in fortunate circumstances. We saw the loving care with which difficulties in the transferring of fortunes from one generation to another are being ironed out in successive Budgets. We came to the simple conclusion about the social justice aspect of the Budget that it is tax cuts for the rich and wage cuts for the poor.

Mr. Lawson: Unfair.

Mr. Smith: The Chancellor may say that, but there were tax cuts for the rich. Under the period of this Conservative Government, the rich are better off by £3,000 million every year. The right hon. Gentleman knows that we are entitled to take one Budget with the others and look at the Conservative Government's record. He may think that that is unfair, but I do not. The benefits given in one Budget are retained for the following year.
There is the long-term problem of industrial decline. Unlike the Secretary of State for Trade and Industry, I do not take the sunshine view of our economy that all is going well and we have little about which to worry. The truth is that with a balance of trade deficit on manufactures of £4 billion — it was only under this Government that we moved into such a balance of trade deficit—we are in difficult circumstances. Many people are worried that in the 1990s we shall be faced with industry based on obsolete technology and staffed by an unskilled work force. That will happen just at a time when North sea oil is running out, and for Britain to try to re-enter the highly technologically developed manufacturing system will be difficult, if not impossible, with the way that we are going.
The Secretary of State referred to the future support for innovation schemes; but, even in the new industries, the Government are cutting back support for crucial industries. The Secretary of State chose not to give us the figures. He is good at giving us figures about anything else except for the policy changes that he announces. Although we did not get any figures, I suspect that there is a substantial reduction in the amount of money that is provided. At least this time the announcement was made to the House instead of being sneaked into a parliamentary written answer as it was on 12 November 1984.
The Government are withdrawing assistance to important industries in information technology where we have a substantial balance of trade deficit as well, as the Secretary of State knows. There is a distinct change of emphasis in the Government. We used to be told about the sunrise industries by the right hon. Member for Mole Valley (Mr. Baker), who is now the Minister for Local Government. As the Minister for Information Technology, he gave a great deal of support to the sunrise industries, but since he has moved the scene has changed.
The Ashworth report, set up by the National Economic Development Council, told us that the industry is in danger of being eclipsed before it has risen. Unless we get new technology, introduced properly, we shall not have the industries of the future, and existing industries will not be able to adapt and renew to play their part in creating wealth in the future.
I mentioned creating wealth because the Secretary of State seems to find it surprising that the Labour party should argue for policies for the creation of wealth. We want to see the creation of wealth, unlike the Conservative party, which does a lot of talking about it, but not much to achieve it. It is odd to observe that the Government are not creating wealth but are redistributing it. But instead of redistributing it from the rich to the poor, they are redistributing it from the poor to the rich. We are not increasing our national wealth. I wish to goodness that we had some policies substantially to create national wealth. The Secretary of State seems to think that, because output is historically up this year on last year, that is good enough. No doubt he will come back next year and say that, as a result of a small increase, the Government are doing well and putting output up every year. He should know very well that in the whole of this century, output has gone up one year after another.
Urgent action is necessary in three sectors to improve our industrial future and performance. We need a new look at education and training. The right hon. Gentleman, when he was Secretary of State for Employment, was responsible for dismantling a great deal of our training system and for destroying our apprenticeship schemes. He

is continuing the task, because the changes in YTS are irrelevant to the major problem that we face, which is training new technologists for the future at all levels, from school right through to the higher research institutes.
Recently, the Prime Minister of France said that education and training were so important to that country that it needed 20 years unremitting effort. I wish that we had a Minister in this Government who would take such a view about our future.

Mrs. Elaine Kellett-Bowman: rose—

Mr. Smith: We know that the programmes for research and development that we have are insufficient. It will not do to allow just a little more tax deductions by way of the business expansion scheme.

Mrs. Kellett-Bowman: The right hon. and learned Gentleman is not giving way at all.

Mr. Smith: The hon. Lady knows that I have given way frequently, but other hon. Members wish to speak.
The key to new products and new processes lies in the application of research and development to our industries. What the Government have announced in the Budget is pathetically irrelevant to the scale of the problem that we face.
We also need new methods of investment. As the Secretary of State for Wales told us only a fortnight ago, the City has lamentably failed the country. It does not produce the available money—

Mr. Tebbit: That is not so.

Mr. Smith: I did not say it. A member of the Cabinet said it. I am entitled to take what a Cabinet member said and treat it with a certain amount of respect, although I would not do that for all members of the Cabinet. For once, this Cabinet member happened to strike the nail on the head. We know that it is true.

Mr. Tebbit: The right hon. and learned Gentleman is being selective.

Mr. Smith: I am not being selective. I was taking the basis of the whole speech, which the right hon. Gentleman would do well to read.
We know that investment is not being provided on the scale and for the purposes that are required and we do not have the long-term investment in Britain's future that we need. None of these important developments is encouraged by the Budget. It is not so much an unremarkable Budget, as some have said, as a bald Budget, because it perpetuates a political assumption that the Government are making, that they can get away with high unemployment and that their political future will be unscathed, despite the fact that unemployment will stay high and may even rise. That assumption, on which the Government are proceeding, will not be tolerated by the people, who have seen, as Budget has followed Budget, the Government woefully and deliberately taking steps—

Mrs. Kellett-Bowman: On a point of order, Mr. Deputy Speaker. Is it in order for the right hon. and learned Gentleman deliberately to repeat the misleading statement that output has always gone up, when under Labour it did not?

Mr. Deputy Speaker (Sir Paul Dean): That is a matter for the right hon. and learned Member for Monklands, East (Mr. Smith).

Mr. Smith: The Government are proceeding upon the political assumption that they can get away with high unemployment. I dare say that when they retire at night to chew the fat, they say to each other, "Well, we got away with it in 1983, and there is no reason why we should not get away with it at the next election."
However, people are seeing clearly what the Government's game is. They see that high unemployment is being used to discipline the work force, and, if that is not enough, low wages are to be brought in, and, instead of having a high-producing, high-wage economy, we have a low-productivity, low-wage economy, with all its effects on the standards of living of ordinary people and their families, and which they remember from bitter experience between the wars when similar policies of deflation were followed.
Time is running out for the Government, because what they are doing is being understood more clearly by people. Eventually, the Government will find that the verdict of the people, whether it comes early or late, will be based on the Government's wilful neglect and the creation of the misery of mass unemployment.

Mr. Edward Heath: Through the kindness of the media, I had a number of opportunities before the Chancellor made his Budget speech of saying what I should have liked to put in my Budget. Therefore, I am not suffering from the benign neglect with which the Chancellor treated sterling in earlier days. I do not wish to take a great deal of time, but I should like to deal with some of the basic aspects of the problem.
The country was hoping that it would receive from the Chancellor a major creative effort to enable the economy to grow on a sufficient scale to bring about a substantial reduction in unemployment. I believe that a large number of hon. Members of all parties wanted the Chancellor to introduce just such a Budget. He was absolutely frank when he said that he was not going to do so. He introduced a deflationary Budget at a time when there is massive unemployment, which again the Chancellor has been frank enough to tell us will continue to increase. Therefore, after six years of Conservative Government we are faced with unemployment that is getting worse and worse. It is with great sadness and regret that I see this happening.
There has been discussion this afternoon about the political advantage being on one side or the other. To many hon. Members that is not the major factor. The major factor is that in itself unemployment is a pernicious evil. One of the major objectives of those hon. Members who came into politics after the second world war was to prevent the 1930s ever being repeated. Now, to our dismay, we see a situation developing which is worse than that which we lived through in the 1930s. What is even more disturbing is that now we are going back to the same sort of terminology which was used in the 1930s and which then completely failed to solve our problems. The situation was alleviated only by the outbreak of war in 1939.
The Chancellor says that he has been boxed in. Of course he is boxed in, by his own beliefs. There are wide differences among hon. Members about the action which ought to be taken. The major difference is whether or not the Government should make a major effort of their own, through Government expenditure, to deal selectively with the weaknesses in our infrastructure in order to bring us

up to date and enable industry to be more efficient, and, in the process, create genuine jobs. This is not a scheme under which it is said that we must find some way of providing jobs, and therefore we must spend money. This is investment for the future. What we are able to do today we owe very largely to the investment of our forefathers in the 19th century and in the early part of this century. If our infrastructure is not kept up to date and efficient we shall betray those who are to follow us because they will not have the same facilities as we have enjoyed during our lifetime.
I said that there are wide differences of view between the two sides of the House and certainly within my own party on this matter. No attempt has ever been made to bridge those differences. I believe that the time has come when we must try to bridge them, not by debating points across the Chamber but by trying to find a definitive solution to the questions which are being raised.
I should like to make one general point, which was touched upon by the right hon. and learned Member for Monklands, East (Mr. Smith) at the end of his speech. I always understood it to be the aim of the Conservative party to achieve a high-wage, high-productivity, low-cost economy. I give credit to the Chancellor for what in his early days he urged upon us in that direction. It seems that we are now in grave danger of going in exactly the opposite direction—of pursuing a low-wage economy without the incentive of achieving high productivity, while still maintaining high costs.
In this respect, the abolition of the wages councils is a retrograde step. Examination of the wages councils is absolutely justifiable and reform may well be necessary, but their abolition will be very considerably opposed by this side of the House, as well as by the Opposition. Having been privileged to be Minister of Labour in my time, I know of the work which the wages councils do. I am reinforced in this view by the fact that a large number of employers do not want the wages councils to be abolished. They believe that they do a good job for those who are covered by them — even 2·5 million is a substantial number—and that they bring about good industrial relations between employers and those working in firms that are covered by the wages councils. That is why they do not wish the wages councils to be abolished. I want to sound that note of warning to my right hon. Friends opposite—[Laughter.] I meant opposite me on this gangway.
Another worrying aspect is that, although the national insurance contribution changes may help the Chancellor to reduce the contribution of the lower paid, they militate against the employers of the higher paid. If we are aiming at a higher-pay, higher-productivity, low-cost economy, again this is going in the opposite direction. I cannot but feel that, by making these changes in this form, my right hon. Friend the Chancellor of the Exchequer has overlooked those basic principles at which we have been aiming for a long time.

Mr. Lawson: If my right hon. Friend is so anxious that there should be ever higher pay, why, when he was Prime Minister, did he introduce a statutory pay policy?

Mr. Heath: I introduced a statutory pay policy with the full support of every colleague in my Government because of the extreme position in which we found ourselves in 1972–73 as a result of world inflation in commodity prices


and of the world increase in oil prices. It was always believed that it would be removed when we reached a stable position, and we worked towards that end. What is more, we allowed for considerable increases in wages as we unwound the pay policy. This is one of the myths. The Government have a pay policy. What are they doing all the time bullying the nationalised industries if they do not have a pay policy? Of course they have a pay policy. What are they always urging the trade unions to do? What does the Secretary of State for Employment spend his time lecturing the trade unions about? If we believe in a market economy, we do not spend our time lecturing the market about what it ought to do.
This is the inner contradiction about the Government's attitude. They spend their time saying that sterling is too low. One cannot say whether sterling is too high or too low if one believes in a market economy. The market settles it. At one time the Prime Minister said herself that sterling was too low. One cannot say that if one believes in a market economy, because the market settles it and one cannot have any say in it. If the market has settled at that level, that is the market level in the economy. If my hon. Friend does not understand that, I am very sorry, but it justifies his intervention on sterling.

Mr. Tebbit: It is not necessarily a matter of telling people what they should pay for something. It is often a matter of expressing an opinion as to whether an asset is under-valued or over-valued. It is often a question of telling people what the consequences are of over-valuing or under-valuing assets. That is not incompatible with a free market economy, any more than my right hon. Friend's statutory pay policy was incompatible with his election manifesto that stated that we utterly rejected the philosophy of compulsory wages control.

Mr. Heath: And when we found the necessity for it, and the whole Cabinet supported it, we had the courage to change our policy to deal with that emergency. If the Chancellor has the courage to change his policy to deal with the present emergency of nearly 4 million unemployed, and rising unemployment, I shall have the greatest admiration for him.
We have been told by the Secretary of State that demand is enough. I think he said that there was plenty of demand. But what is "enough"? How in these circumstances does one define "enough"? If unemployment is at the scale that it has reached now and is rising, how can one say that demand is enough to keep those people in employment? If we do not, we are admitting the need for unemployment. That is the basic argument. That is why I want to draw the attention of the House to these basic points which we have got to face, both philosophically and politically.
What is enough? It is quite apparent today that the demand is not enough. The Front Bench insinuation is that the demand is there, but that it has been taken up by imports. There is no indication of how one prevents that happening. The importation of manufactured products has become a far worse problem. However, even if one were able to prevent all the consumer imports, one would still not deal with mass unemployment. There would still be a massive figure, which can be easily calculated. Demand is not enough. There are 24 million unemployed in the OECD countries and that affects all of us, although the United States to a lesser degree.
Now we are told that borrowing for a programme such as many have urged causes inflation. That is a sentence which, in vacuum, is meaningless. Borrowing is going on already. The Chancellor has to decide the level of borrowing. Chancellors have overshot by between £2 billion and £3 billion on their expectations year by year. That has not brought the world or the country to an end. Nor has it produced a solution.
But Goverment borrowing must be seen in relation to the savings of the people. Whether borrowing causes inflation must also depend on unemployment. The fact is that there is massive unemployment. Inflation also depends on the use to which borrowing is put. If it is used for capital investment, as is being urged, it is justifiable. If it is for pure consumption, it is obviously unjutifiable. Those must be the criteria by which we judge whether borrowing for a programme will cause inflation.
We have also heard the argument that borrowing will push up interest rates. The Treasury in Washington and the Federal Reserve Board take exactly the opposite view. They have said publicly that high interest rates are not caused by their own borrowing. Paul Volcker has stated that publicly. The United States has high interest rates, but the United States does not connect that to the borrowing.
The United States has carried through the greatest reflation in history, yet it does not have high inflation. Yet we hear that, if we are to carry through a modest amount of reflation, that will bring about a massive inflation. That is not a justifiable argument.
I am sometimes puzzled because we are always urged to follow the United States in its policies and attitudes. We are told that the American dream must be pursued. I do not know what the American dream is, but I know what the present American situation is. It is borrowing three times as much as we do, taking our currencies and GDP into account. It is taking 70 per cent. of its private savings in order to carry out that policy. The rest—30 per cent.—is coming from overseas. United States savings as a percentage of disposable income are between 5 and 6 per cent. In Britain, they are between 11 and 12 per cent. Therefore, we have more than twice as much disposable income in savings than the Americans if we want to use it properly. The Japanese have 18 per cent. of their disposable income in savings and that enables them to have a much larger borrowing requirement and for the Government to carry out investment.
On the one hand, the United States is showing what it can do by a massive budget deficit, which is largely carried through defence programmes and which goes on into other private industry programmes. On the other hand, the United States is now an international debtor. By the end of the year, it will be the largest international debtor in the world—larger than Brazil. That does not alter the fact that we have twice the personal savings of the United States and just over half that of Japan which can be used for Government purposes.
My right hon. Friend the Secretary of State identified the public sector borrowing requirement as one of the causes of the fall in sterling. I cannot accept that for one moment. When one talks to operators on the exchanges, particularly in Wall street, they have no idea what the British Government's borrowing requirement is or will turn out as. What they do know is that they are worried about the oil crisis and its effect on our economy. They are worried about the future of the oil industry, as that turns


down on our economy. That is what is worrying them as long-term investors in Britain, not the Government's PSBR.
Our interest rates are almost entirely governed by American interest rates. The PSBR did not cause the pound to drop. The pound dropped because the dollar rose with increased confidence in it and because of the doubts that I have expressed. Now the pound has risen. That is not because the borrowing requirement has been shown to be any different. It is not even because of the increase of 4·5 per cent. in interest rates. They had no immediate effect. The pound went on dropping. No, it was caused by doubts about whether the United States could keep up its growth and by the banking crisis in Ohio.
That in itself should be a warning to us about the position of the United States. With farmers in a more and more difficult position, the impact on the farm banks will grow. We may well find them in the same difficulties as the savings banks in Ohio. We hear so much about the strength of the American economy, but one has only to think of the furore which arose here, rightly, with the collapse of one bank in the City of London. To have 71 banks collapse at one time shows the danger in the American economy.
My next major point concerns the free market. That affects much of what my right hon. Friends the Chancellor and the Secretary of State have said. It is commonly said that we must remove all distortions, with no explanation as to why action has to be taken. That is not justifiable. Distortions are of two kinds. There are natural ones which we try to counter-balance through our policy and our financial legislation. They provide the justification for regional development programmes, which the Government are rapidly dismantling. Therefore, we find that the north cannot compete with the south. That is why it is falling more and more into derelict acreages. I do not want to go into detail, but I shall argue that at any time with anybody.
Other distortions in our financial legislation were because we wished to influence circumstances at a certain time. We must ask ourselves whether those circumstances have changed sufficiently to alter the situation. There is no automatic principle that distortions of any kind must be removed. That is where we are liable to be misled. To abandon them without showing that they are no longer necessary would be an abdication of government.
I believe more strongly than ever that a Government programme of investment in the infrastructure is desperately needed and should be carried through. My right hon. Friend the Secretary of State's announcement on education is welcome, as is the Chancellor's Budget announcement on the youth training scheme. We must face the fact that Britain still does not have a comprehensive technical education scheme which compares with those of our competitors. This scheme will not be put into effect for another year, so another year will go by and the young will still be unemployed and untrained.
Let me add a word of warning here. Many of us would find it extremely difficult to accept a situation in which social benefits were removed from people between the ages of 16 and 18 if they did not accept a Government proposal for a training scheme. [HON. MEMBERS: "Why?"] Because I strongly believe in the freedom of the

individual, including young people. I shall go on believing in that and I do not believe in taking it away from young people.
When one puts together the abolition of the wages councils and the removal of the safeguards on unfair dismissal, one can see that unscrupulous employers will be given the opportunity to employ young people on a low wage and dismiss them within two years in order to take on new young people. We have seen that happen before and we opposed it. We produced legislation to prevent it happening. That is why I am sad to see these proposals come forward.
We must also have a regional development policy to create a balance between the north and the south. We have tried to do that in the past, with considerable success—[Interruption.] Does anybody doubt that success?

Mr. Peter Hordern: Given the substantial grants that have been made to the regions for many years, what success can my right hon. Friend possibly point to? What extra employment has been provided by those grants?

Mr. Heath: Until this world depression, or the depression in this country, arrived, I could have pointed to innumerable places in the north-east—[Interruption.] I was responsible for the north-east in 1963. Lord Hailsham did the plan and I carried it through. What would the north-east be like today without what we did? If my hon. Friend went to Scotland, he would see that the plan is still working there, because Scotland receives a much higher grant than the regions of England. My right hon. Friend the Secretary of State for Scotland can work with local government, and Scotland has its own organisation overseas to obtain trade and investment for Scotland. Despite all the difficulties, there has still been success.

Mr. Nicholas Budgen: Will my right hon. Friend also point out that that policy was designed to disadvantage the west midlands, and that it has been remarkably successful in that regard?

Mr. Heath: That policy was not designed to disadvantage anyone, and it did not do so. This is the first recession in which the midlands has suffered. Many of us always noted that some cities, such as Leicester and Nottingham, because of their diversification, were not affected in the same way as regions such as the north-east, Scotland, Wales, the north-west and other regions containing the older industries. Birmingham always came through, along with Leicester and Nottingham. But on this occasion, I am sorry to say that Birmingham has not come through. How can those acres of dereliction in the west midlands be restored to our industrial life unless there is an efficient regional policy?
I repeat that we should join the European monetary system. Once again I repeat my plea to my right hon. Friend the Chancellor of the Exchequer kindly to explain to the House, on one occasion in detail, why we are not members of the EMS. Our membership would not only bolster sterling, but would give us more influence in Europe, and would enable us to hold our position with other currencies such as the dollar.
Our greatest problem is our manufacturing industry. There can be no doubt that the base has been eroded. Where else would those derelict acres have come from, had it not been for the fact that our industrial base had been


eroded? When my right hon. Friend the Secretary of State cites particular industries, he does not mention the manpower involved in their percentage improvements. The new industries such as the high technology, biotechnology and communications industries are not employing anything like the manpower that our older manufacturing industries employed.

Mr. Lawson: It is the same all over the world.

Mr. Heath: Very well, but that is a fact about the new industries that must be faced. It may be true throughout the world, but I am concerned about this country as well as the rest of the world. If we are going to deal with that position, we must face the fact that we must find employment for those people. How is it to be done? We are not addressing ourselves to that question. We are saying, "Yes, this has gone up a percentage point since 1979, when the Labour Government were in power." But that does not concern me. I am concerned about what we are going to do to replace our derelict areas, to replace the industry that has disappeared and to help the 3·5 million people — and the number is increasing — who are unemployed. That is the crux of the matter.
Our solutions should not be impeded by the sort of dogmatic assertions that I have shown are unnecessary and unjustifiable. When we can face up to that future, we shall have some chance of solving the problem. Of course it will take time to solve it, but we must first recognise it openly and frankly, and then say how we are going to re-create the industrial base that this country needs. It will not be done without the Government. It can never be done alone in modern times, on the scale needed, by saying that we will leave that to private enterprise and that we need only think about the supply side.
Unless that is realised, we shall be left with a legacy of dereliction throughout the country and massive unemployment for decades to come. That is not a future to which I am prepared to look forward.

Mr. John Silkin: Whatever the Secretary of State for Trade and Industry may try to tell us, this debate is not about recovery but is, as the right hon. Member for Old Bexley and Sidcup (Mr. Heath) has told us, about a deflationary Budget.
The Chancellor of the Exchequer has responded to the mythology and superstition of City opinion, which he himself helped to foster. Indeed, he more than anyone is the author of the constraints that he now claims to face. For half a dozen years he has been peddling his medium term financial strategy—a permanent prescription for severe deflation. In last year's Budget speech he presented his medium term financial strategy as a formula for financial discipline, the 1980s equivalent of the gold standard and the balanced budget.
Yet again this year the Chancellor of the Exchequer assures us that he has little room for choice, and that there is "no virtue like necessity." But he chooses to ignore the fact that it was only by abandoning the gold standard and the balanced budget that Britain escaped from mass unemployment 50 years ago. Only by breaking free from the Government's medium term financial strategy will we generate real recovery in the 1980s.
As the right hon. Member for old Bexley and Sidcup has said, what is missing from the Budget is a major

programme of public investment in construction and civil engineering to rebuild our crumbling infrastructure and to create new homes for the homeless and the overcrowded. The need is enormous and the resources could be made available. In England and Wales there are more than 2 million homes that are either unfit or in need of basic amenities. We have roads and sewerage systems that are falling to bits. We also have 500,000 building workers looking for work but unable to find it.
The Chancellor of the Exchequer tells us that the coal dispute has cost £3 billion in one year. That is his excuse for a deflationary budget. This country has three times as many building workers unemployed as there were striking miners in the coalfields. What about the lost production caused by the enforced idleness of construction workers? Britain has an army of jobless bricklayers, carpenters, painters and decorators, dumper drivers and so on, all desperate to get back to work. They want to be on the site, not on the dole. That is bad enough but what is infinitely worse is the effect that that has upon the future of our country.
Reference has already been made to the technological age. To move into that new technological age without the skills that are necessary to house and buttress those skills is to give up the technological race to our competitors: unemployed building workers speedily drift out of the profession; the skills that have been built up over so long a time are all too easily lost forever.
But the Chancellor of the Exchequer has turned a deaf ear to the chorus of voices not just from the trade unions but from employers, unions and independent bodies alike, all calling for a programme of public sector investment in construction. Spending on the public infrastructure such as roads and sewers is the cheapest way of getting people off the dole. It also saves money in the long run. In its latest report, the national Economic Development Office says:
The consequences of delaying required maintenance work can be well illustratd for roads. An average life for a road's surface dressing may be 4–8 years. A failure to renew this dressing (the minimum treatment) at the appropriate time can lead to the need for complete resurface at a cost per square metre some ten times greater than that for surface dressing. If resurfacing is also delayed so that the foundations of the road are affected, the cost of restoration can be fifty times that for surface dressing. One typical shire county estimates that at present even its principle roads are only being surface dressed every 10–12 years.
Or take my own borough of Lewisham. The chief executive has drawn attention in the February 1985 issue of Town and Country Planning to a stretch of major road where the water main has burst six times in the past two years. Many hon. Members can tell of similar experiences in their constituencies.
In a real sense less than nothing has been done about this for years. Two of Britain's industries have just passed their fourth successive year of negative net investment in real terms. For four years spending on plant and equipment in the construction and transport industries has been so low that they failed even to maintain their stock of equipment intact, let alone modernise and increase it.
Last year the deputy governor of the Bank of England, Mr. Christopher McMahon, pointed out that the same thing had been happening for three successive years to manufacturing industry — a precise repeat of what happened in the 1930s. The Government should be acting to reverse that spiral of decline. Instead, they have cut back further on public sector construction contracts.
In addition, the Budget encourages the revival of labour-only subcontracting in the construction industry. That is a recipe for neglect of safety considerations and of workmanship. Overlooked guard rails and overloaded scaffolding can be death traps. The Health and Safety Executive reckons that self-employed building workers suffer 15,000 injuries a year which are not covered by the 1980 notification of accidents regulations.
The Director General of Fair Trading has drawn attention to shoddy work by cowboy tradesmen. The catalogue of botched jobs, such as securing nails that are missed out and new fittings attached to clapped-out wiring, is legion. Covering up faulty or skimped work is the hallmark of the self-employed cowboy whose motto is
In glue and dust we put our trust.
If they won't work, putty must.
If the income tax and national insurance rules are to be changed to give a boost to self employment, the building trade should have been exempted. A real effort must be made to defeat the lump.
We are told that the Government are no longer simply monetarist, but that they have now embraced supply-side economics. In a way I am a supply-sider too, in that I accept the validity of Josh Billings's comment:
As scarce as truth is, the supply is greater than demand.
The Government are refusing to face the truth that there is an alternative to mass unemployment. The Budget does not provide that alternative. It is not a Budget for jobs at all. It is a Budget against jobs. This Budget leaves the unemployed where supply-side economics has always meant them to be—in Professor Galbraith's phrase, "abundant, redundant and poor." That is not a recipe for recovery. It is a recipe for disaster.

Mr. James Prior: It is a long time since I made a speech from the Back Benches. I must crave the indulgence of the House. It will come as no surprise to a number of hon. Members when I say that at times I have disagreed with Government policy in the past few years, and that sometimes I even disagreed with my party's policy in opposition. However, I am not setting out to be a rebel in what has become the accepted sense of the word. I shall try to steer a course between the fairly wide spectrum that exists between my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) and the Chancellor of the Exchequer.
I remind myself and the House that the late Jain Macleod always said that running the country economically was like a juggler trying to keep a number of balls in the air at the same time. He referred to three balls—inflation, unemployment and the balance of payments. It is easy to get one ball in the air and perhaps even two. The secret is in getting three balls in the air. If we are frank, we should accept that no one, for more than a very short time, has managed to keep all three balls in the air at the same time.
The Budget provides an opportunity to look at the economic situation and to assess how we are doing. I believe that Budgets are a much overrated pastime. I cannot for the life of me see how a country with a middle range industrial base such as Britain can have a statement once a year and think that nothing will alter between one and the next. I am certain that, before many months are

up, the Chancellor will be back to make another statement. That does not mean that he should indulge in the old concept of fine tuning, but that with the uncertain state of the world and with large amounts of money sloshing all over the place, it is not possible to set a course on 19 March and think that it can be followed immutably until the Budget the following year.
The Chancellor of the Exchequer has taken a number of extremely useful steps in his Budget. I think of the improvements to the youth training scheme, which is a great advance. For the first time we have the beginnings of an amalgamation of national insurance and tax. That must be the right way. There are improvements in science and technology and the announcements today by my right hon. Friend the Secretary of State for Trade and Industry. These matters are complicated and I shall not talk about them now. If the Chancellor is doing anything to help reduce industry's costs and to reduce the burden on industry, we welcome it. We certainly welcome the Secretary of State for Education and Science's additional money for technology and engineering training.
I agree with my right hon. Friend the Member for Old Bexley and Sidcup that our manufacturing base has narrowed considerably. No one can doubt that. A number of other industries are coming along to take its place, but the high exchange rate between 1979 and 1981 did not destroy just the fat; it destroyed quite a lot of muscle. That in part explains why we are importing a larger percentage of manufactured goods.
The manufacturing industry is still the main provider of employment in Britain. Without it, most service industries cannot prosper. The number employed in the service industries cannot be increased without a good and prosperous manufacturing industry. Some important service industries, such as banking and insurance, do not always rely upon manufacturing, but at an insurance dinner the other night the chairman of an insurance company said that he needed a strong base at home to sell insurance in the rest of the world. Tourism also plays its part. Basically, manufacturing industry counts in terms of greater employment and the use of wealth.
The Government are not paying sufficient attention to the need to reduce imports and to encourage exports. We are now competitive in terms of price, but in export markets we are often nothing like as competitive as others in terms of available credit.
The aid and trade programme is an important help to British industry. It can help countries which need aid, but it can also help British industry to give those countries a capital goods structure, which means that they will have to come back time and again to re-order from Britain.
The penny-pinching of the Foreign Office budget is a great mistake. During my many travels in recent weeks, I have come to respect a great deal more of the work carried out by the Foreign Office and the trade commissioners. It is absolute folly to cut back in the way that is intended. For instance, the more overseas students, who do engineering and manufacturing-based degrees in this country, the more likely they are when they return to their homes to order goods from Britain.
Those are important points. I do not think the Treasury always takes a broad view; it tends to look at matters in isolation. For example, if I am asked what the measures I have discussed will do for employment, I have to say that, in isolation, they will probably do very little. But if we believe that manufacturing industry is a crucial


employer of labour, a little extra money spent wisely on some of the measures that I have suggested could have a remarkable effect on the level of employment in manufacturing or service industries, and will, in the long run, reduce unemployment and expenditure on unemployment.
I hope that the Treasury will not always look only at the gross figures. This is the first Budget when it has tended to look at the net figures of some of the measures. I used to argue strongly with my colleagues that we should look at the net figures. Perhaps, for the first time, we are now doing so. Although it is well known that I have a thing about the Treasury, I do not think that it is wholly unjustified. The Treasury has a lot to answer for, because it sometimes has not seen the picture in the round.
The Government get themselves into a terribly difficult position by always concentrating on particular targets such as the public sector borrowing requirement or the medium term financial strategy — which is meant to be only indicative, but which has become part of the Holy Grail. The PSBR is the difference between two enormous figures which are bound to change very considerably during the course of the year. The problem is that all these things may be very important, but a Government must weave and turn and not be stuck on particular figures.
On the occasions that I have gone to the City, I have asked those who work there how they think things are going. They say, "We are a bit worried about the level of the PSBR." When I ask why, they say, "Because the Government tell us that we should be worried about it." I have then discussed that with my colleagues, and I have asked them, "How do you think things are going?" They say, "We are very worried about the PSBR." When I ask why, they say, "Because the City tells us we should be worried about it." There is a degree of semantics in this, and I hope tht we will try to get away from it.
I was delighted to read in the Financial Times today, and to note from the Chancellor's speech, that my right hon. Friend is beginning to realise that borrowing need not be quite so tight as it has been in the past. We are borrowing less now than any other advanced society in the world. We have become pinned down on borrowing, which has restricted — and continues to restrict — the Chancellor's ability to move. Therefore, I welcome what he says about possibly doing something next year.
On the argument about extra borrowing and therefore extra public expenditure on infrastructure — it is a dreadful word and I wish that we could find a better one — I simply say that if there are important tasks that need to be done, and which can be shown to be cost-effective and economically worth doing, we should try to find the money for them regardless of whether or not that creates more jobs. If something needs doing, it should be done in the interests of the economy as a whole. We often continue to pour out revenue simply because we have never found quite sufficient money for the capital expenditure that would save revenue in the future.
Those are a number of fairly critical, but not too critical, suggestions, and I turn now to the supply side of the economy. By their legislation and by the changing of attitudes, the Government have done an enormous amount to bring about a better balance between management and labour. There is a growing understanding among trade unionists and others on the shop floor that they cannot simply go on in the old ways, that there must be changes and that the only way to keep a job is to be prepared to

accept change and new methods. Simply thinking that one can put one's head in the sand and forget about the problems because of the protection of a trade union is no longer an answer.
Although the legislation that the House has passed in three successive Acts is not used a great deal, it is having a very marked effect on the way and the manner in which trade unions behave. The trade unions must come to terms with the legislation. If they do, they can start to take advantage of it. In future, there will not be the opportunities for trade unions simply to tell people what they can do and expect them to do it. Trade unionists will now want to play a much bigger part in the running of their unions and in the decisions that they make.
It is interesting that the AFL-CIO, the American trade union organisation, has been looking at its records over the past few years, when its membership has fallen and its power of authority very much lessened. It has produced a new document with the remarkable phrase
unions find themselves behind the pace of change.
If that is true of American unions, it is certainly true of unions in this country.
I should like to hear the right hon. and learned Member for Monklands, East (Mr. Smith) tell the House his views on the employment legislation. He will he doing his party and the country a grave disservice if he thinks that the Opposition, if they gain power at the next election, should repeal the measures on the statute book. I regard their attitude to the legislation as a great test of their sincerity in wishing to have a coherent industrial policy.
I want to say something about the other supply measures. The measures relating to trade unions have been a successful piece of supply economics. I cannot say the same about one or two of the measures in the Budget. My hon. Friends will know of my strongly held views on wages councils. They may need change or alteration, and some of the independent members may have behaved in an extraordinarily silly manner in some of the wage awards, but they do protect the poorest section of society, and that poorest section does need protection.
Getting rid of the councils will not necessarily increase the number of jobs. It might increase the number of part-time jobs, but we are desperately in need of more full-time jobs. The people who are particularly suffering in Britain today are the long-term unemployed, those who have been out of work for more than a year. We must do all we can to get them back into employment.
We might well follow the suggestion that in the first year of the long-term unemployed coming off the unemployment register, they should not have to pay national insurance contributions. That would be a considerable incentive to people to employ the long-term unemployed.
I fear that the latest measures will not make much difference to the level of unemployment, particularly among low wage earners. Evidence of that is to be found in the fact that the young workers' scheme has not worked. That scheme was designed to persuade people to accept that, if wages were kept below a certain level, there would be £15 for the employer, so reducing his labour costs and enabling him to employ more people. That scheme is now being scrapped.
It was a piece of supply side economics which a few close advisers of the Prime Minister thought would work. I fear that some of the suggestions in the Budget came


from the same stable. They should go the same way. It is not part of Conservative philosophy to push down those who are already the poorest sections of society.
This is a Budget for jobs. The Chancellor found himself boxed in with little room to manoeuvre. To that extent, I admire his ability to build with what he had available. No Government can do everything. On the other hand, no Government need do nothing. It is not enough for the monetarists to say that nothing can be done about unemployment, just as I and a number of others made the mistake of believing as Keynesians that nothing could be done to stop inflation rising. The truth is that neither the old doctrine of Keynesianism nor the new doctrine of monetarism is the answer to Britain's problems.
We know, or should know—particularly those on the Conservative Benches should know—that there is little place for dogma in a society as free and independent as ours. We must cast out dogma and do what we know to be right and sound and common sense for society. If we do that, the Chancellor will start to tackle the terrible problem of unemployment. I hope that he will have more success than we have achieved up to now.

Mr. Roy Jenkins: The right hon. Member for Waveney (Mr. Prior) reminded the House that he was making what was for him almost a maiden speech, speaking from the Back Benches, it having been a decade or more since he had addressed the House from that position. I feel, therefore, that I should congratulate him and say that we look forward to hearing him again. He made an interesting and good speech. He managed well without a Dispatch Box. With the more significant part of his speech I was in agreement, though I thought, in manner at any rate, that he was rather more anxious to be emollient to the Government now that he was no longer a member than he was when he was in the heart of the Cabinet.
I was in almost complete agreement with the remarks of the right hon. Member for Old Bexley and Sidcup (Mr. Heath). That is happening increasingly often these days. Indeed, that trend has been developing over the past 10 years. I do not know what effect losing the leadership of the Conservative party is said to have had on his temper, but it has had a remarkably good effect on the sense and sweep of his judgment and view of the world.
I do not know what would happen if the fate that befell the right hon. Gentleman were to befall the present Prime Minister and whether it would have the same effect on her. I am unoptimistic on both counts.
There has been talk recently of a consensus developing against the budgetary policy. Indeed, the chairman of the Conservative party, the hon. Member for Suffolk, Coastal (Mr. Gummer), gave a certain authenticity to that in a speech last week in which he denounced the consensus. He performs a useful role in the body politic; whenever an idea begins to achieve sense and force, he is immediately sent in to denounce it. He is rather like having an adviser who is invariably wrong, which, so long as one is aware of the adjustment that must be made, is almost as good as having an adviser who is invariably right.
On this occasion he said that it was not a consensus but just the old Callaghan Lib-Lab coalition of 1979. That was rather offbeam. I do not recollect the right hon. Members for Old Bexley and Sidcup, for Chesham and Amersham

(Sir I. Gilmour) or for Cambridgeshire, South-East (Mr. Pym) being great supporters of that Government. Indeed, I was not a supporter of them at that stage. Nor, for instance, was Lord Stockton.
There is developing a remarkable and spontaneous consensus not so much against the Budget—because the Budget, the burnt offering of a chastened Chancellor, is hardly worth the creation of a hostile consensus—but against the central tenets of the Government's economic policy, against their hallowed medium term financial strategy.
Let us neither underestimate nor be imprecise about how deep is the difference between the Government and their critics on both sides of the House and how shallow are the differences between the critics, wherever in the House they sit.
What are the main points of difference? First, the Government believe that there is no shortage of demand and that any attempt to provide more would foster inflation and not create jobs. The critics almost universally believe that, with unemployment at historically high levels, with the national debt in relation to the GDP, to national income, at an historically low level — barely half of what it was 20 years ago—and with a Budget impact, if one abstracts the features which arise purely as a result of unemployment, which is wholly restrictive, there is significant room for expansion.
Secondly, the Government dismiss any such call as an addict's demand for ever-increasing doses of discredited reflation. It is nothing of the sort. It is not discredited because increasingly there is evidence around the world that in conditions of substantial unused resources, there is a strong and direct correlation between the sizes of budget deficits and unemployment ratios.
In addition, the critics of the Government's policy are not calling for more reflation; they merely seek less vicious deflation. It is clear that the Government's fiscal stance is not neutral; it is strongly deflationary. The £4·1 billion that is due to come off the financial deficit, which is a more precise measurement than the PSBR, in the coming year—the process is due to continue—

Mr. Richard Ryder: Perhaps the right hon. Gentleman will explain how it was that on 17 March, 10 days ago, the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel), the leader of the Liberal party, was reported in the Sunday Times as having suggested that if the alliance were to increase public spending by £4 billion we would have a PSBR of only £8·9 billion.

Mr. Jenkins: The hon. Gentleman had better put that question to my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel), who is frequently in the House, if he wants to know more about the precise arithmetic behind his suggestion. There is no doubt that the relationship between the PSBR and an increase in spending is not a simple or direct one. If it ever had any validity, the Government have completely confused it by the nonsensical act of selling off assets in the belief that that affects the Government's general fiscal stance and position.
I shall divert from these considerations to ask the Chancellor of the Exchequer a question which I hope he will answer when he replies to the debate. He began his Budget speech with a catalogue of praise for the performance of the economy in 1984. He spoke of steady


growth, low inflation, record exports, and record investment. However, the PSBR is £3 billion above target and, therefore, it must be lashed back into line. If the economy did as well as he claimed with a PSBR of £10·5 billion this year, why do we need the PSBR to be reduced to £7 billion next year?

Mr. Tony Marlow: So that we may get the good things that the right hon. Gentleman seeks.

Mr. Jenkins: That is not untypical of the hon. Gentleman; he has the argument completely wrong. How can it possibly be argued that it is good value for money and a good investment to spend £2·75 billion on a miners' strike and a bad investment and had value for money to spend that sum on improving the infrastructure, which will be essential for Britain's future well-being?

Mr. Marlow: rose—

Mr. Jenkins: I have replied to one interjection of the hon. Member for Northampton, North (Mr. Marlow) and that is not a reason for allowing him to make an intervention—

Mr. Marlow: rose—

Mr. Jenkins: —particularly in view of the nature of his interjection.
I turn to the third area of difference between the Government and the generality of the critics on both sides of the House. The Government's financial stance begins to have just a flicker of sense only on the assumption that the road to health is through the intensification of the bleeding to which the economy has been subjected over the past six years. The evidence increasingly is that the slimming down which has come from a destruction of a significant part of our industry has produced malnutrition and not muscular tone.
No one could have put the unpalatable truth with more flat accuracy than did the right hon. Member for Cambridgeshire, South-East (Mr. Pym) last Wednesday. He said:
We are no more competitive today than we were six years ago, and probably less so. We still have a lot of progress to make."—[Official Report, 20 march 1985; Vol. 75, c. 902.]
Perhaps the right hon. Gentleman was being rather kind to the Government for he implied that we are moving, even imperceptibly, in the right direction. On his own showing, Britain is no more competitive now than six years ago, and probably less so, which would suggest that we are moving in the wrong direction. That is the third major difference between the Government and their critics.
I shall deal briefly with one facet of the international considerations. One of the now favourite arguments of Conservative Back Benchers is to play the French card. It has become a well-drilled response. When a loyal Conservative Back Bencher hears the word "expansion" he, to paraphrase Marshal Goering—this is the good Thatcherite—reaches for his anti-Mitterrand gun.
The weapon is inapposite. In 1981–82, the new French Government gave or encouraged substantial pay rises, nationalised a vast chunk of industry and attempted to combine sitting on interest rates with an expansionary fiscal policy. I am not sure about the Labour party, but it would not be the policy of the Alliance, or I believe of various critical Conservative Back Benchers, to embrace any of the first three policies of the French Government. The analogy therefore collapses.
It is possible that there can be agreement on both sides of the House that there is a limit to the amount of expansion which this country or any other, perhaps with the exception of the United States, can achieve against a world trend—in other words, to buck the international system, as it were, and to stand on its own. This does not mean that our room for manoeuvre is negligible. However, it means that it is finite and would confine us to a result well below tolerable unemployment levels. In my view, something significant could be achieved on our own.
In considering how to handle these restraints, a fourth gulf between the Government and their critics immediately opens. The Government are no more in favour of concerted expansion than of unilateral expansion. At least they are consistent on this issue. They practise what they preach and preach what they practise. Outside the United States they have had a certain baleful influence. Their message to the rest of Europe about public sector deficits has been "hurry on down". Where the advice has been followed, countries in Europe, after lagging shamefully behind in 1981 and 1982, have made a brave effort to catch up with us by increasing their unemployment figures. This has been cited constantly with pride and pleasure by the Chancellor of the Exchequer. Where the advice has been rejected—rather excessively so in the United States—exactly the reverse has happened. As we approach the Bonn summit the Government's posture is rather like that of a man holding a red flag in front of a 5 mph train.
The fifth divide between the Government's critics and the Government is that if the Government judged that they could inject a few billion pounds into the economy they would insist on doing so through cuts in direct taxation. The critics, in accordance with all rational analysis, would give priority to well-selected investment and job creation policies. Another gulf is opening up politically and potentially but for the moment this is rather academic. After all his brave talk in the autumn, the Chancellor has run for cover in the spring.
My advice to the Chancellor would be in future to talk less before his Budgets and to do more when he introduces them. Last year, whether out of over-excitement or for some other reason, he leaked everything to the Sunday press. He was lucky that he was not serving under Lord Attlee. This year he did not leak. Of course, there was not very much to leak. However, his actions were still more foolish. He spent the autumn erecting a number of windmills—for example, VAT on books, newspapers and children's shoes and a tax on pension schemes—at which he proposed to tilt. In addition, he proclaimed the huge splendour of the landscape of vast direct taxation cuts which would be opened up after disposal of the windmills. In the event, neither happened. He did not tilt and there was no splendour. The Budget's interest lies, in the main, in what the Chancellor did not do. This may be all right if there is a sense of calm management and others have created the fears. However, the fears have been created by the Chancellor, and the management of the exchange rate in particular has mingled ineptitude and dogmatism in July and again in January into an almost lethal cocktail.
The Chancellor's clamant, know-all discourtesy does not matter much. In some ways, it is rather endearing. At least it is universal—the right hon. Gentleman does not discriminate between people. What matters more is that, of all the 15 Chancellors I have seen operate in the House, the right hon. Gentleman is at once the most arrogant and the most incompetent. [HON. MEMBERS: "Were you the


runner up?"] For some reason, that is not the general view. The Chancellor has become a Figaro who cannot sing, a clown who is not funny. There is no question of bad strategy being redeemed by the Chancellor's virtuoso performance.

Mr. Tim Eggar: I think that earlier the right hon. Gentleman was edging himself and the alliance towards opposing the autumn statement. This is an important policy pronouncement. The Treasury and Civil Service Select Committee called for the autumn statement which was delivered by the previous Chancellor. Is the right hon. Gentleman against the statement?

Mr. Jenkins: Is the hon. Gentleman asking about the context or the contents of the autumn statement. It is desirable that there should be an autumn statement. That does not mean that the Chancellor has to announce in advance a number of proposals that he may or may not make six months later. That is not a sensible way in which to proceed.

Dr. Brian Mawhinney: The right hon. Gentleman has returned to the suggestion that, in some way, my right hon. Friend the Chancellor initiated the public debate about various prospective VAT measures. When my right hon. Friend the Secretary of State for Trade and Industry quoted the words of the right hon. and learned Member for Monklands, East (Mr. Smith), he produced chapter and verse for every quotation. Will the right hon. Gentleman extend to the House the same privilege and let us know, chapter and verse, the reference showing when my right hon. Friend the Chancellor indulged in this discussion about VAT?

Mr. Jenkins: I cannot do that because, as I think the House knows perfectly well, the Chancellor proceeds not by on-the-record statements, but by hints, leaks and indications. If that is not so, will the Chancellor tell us exactly how the whole of last year's Budget was leaked to the Sunday press, as it most certainly was?
We return to certain basic facts. The Government are resolved to continue their deflationary policy. There is no doubt about that. Some of the higher lunacies of believing that control of sterling M3 solved all the problems of pay, productivity or panic in the exchange markets may have been abandoned. The economy may occasionally benefit from the fact that the Chancellor misses his targets, as his predecessor did.
The Government's basic belief remains that the right policy—even with unemployment at 3·5 million—is to reduce the level of Government-induced demand. There is not, therefore, the slightest prospect of unemployment falling below 3 million during this Parliament and well beyond. Indeed, when the great United States boom turns downwards, unemployment will easily be pushed to 4 million, of whom an increasingly high proportion will be long-term unemployed. At the same time, present policies offer no recipe for the revival of our industry, and therefore no real prospect of paying our way satisfactorily when the oil surplus runs out.

Mr. Tebbit: I have been waiting for the right hon. Gentleman to come to his sixth or seventh point on which the Opposition parties are agreed and have a difference with the Government. Are they all committed to an

incomes policy—a freeze, inflation tax or another of the social contracts with the unions which do not work and which the Government believe are the wrong approach? Is that not one of the most important differences?

Mr. Jenkins: I had dealt with five points. Other parties, especially the main Opposition party, must speak for themselves. I would not run away from an incomes policy. I would run away from the hypocrisy of the present Government who pretend that they have no incomes policy but in fact have, and must have, an incomes policy. Let the Government ask any of their employees in the public sector whether they think that there is an incomes policy. It is much better to have an open rather than a covert incomes policy.
Because there is no prospect of dealing with unemployment and we see no way in which, with present policies, we can pay our way when the oil surplus goes —I am talking not about when the oil goes but about when the surplus goes, which will be much earlier—the economic policies that are currently pursued endanger our nation's unity and viability. The prospect is worse—there were some murmurs when the right hon. Member for Old Bexley and Sidcup said this—than during the early 1930s. At that time, the unemployment percentage was marginally higher and there was certainly more widespread absolute poverty, but unemployment did not stay at a high level as it is now. Unemployment has been stuck at a high level since the end of 1981. The unemployment rate began to fall rapidly in 1934. The reduction gathered momentum, but there is no sign of that happening now.
Another analogy with the 1930s is far more apt than the analogy with France during the early 1980s, which is so frequently quoted. There was then an increasingly uncoordinated move to broad agreement against the foreign and defence policies of the Chamberlain Government, against appeasement. It embraced the Churchill and Eden wing of the Conservative party, the Liberal party, much of the Labour party—although a substantial element declined to recognise that arms as well as resolutions were needed to resist Hitler — and many people who were not concerned much with party politics. The move was fragmented and attempts to mount a common programme to achieve a united leverage mostly foundered on narrow party considerations. The Labour party believed in its ideological purity and the Conservatives — only Mr. Harold Macmillan apart —preferred to keep the whip and occasionally fulminate from within the tabernacle. As a result, the policy changed only under pressure from outside circumstances — outside the country. That happened so desperately late as to bring us within a hair's breadth of national disaster. The anti-appeasement coalition never got together until Dunkirk was upon us.
Today, fortunately, the stakes are not quite so high. We are unlikely to be invaded by tyranny. But the danger of a destructive decline that goes past the point of no return cannot be dismissed. This time we shall not have external factors to force us out of our folly. If we are to correct the major errors of current economic policy, there must be resolute and united action from all those who believe and know that we are now on the wrong road. Without that, for all the splendour and sense of the speeches that are made, there is little chance of either the critics or the nation escaping from the glare of the Prime Minister's headlights until it is too late.

Sir William Clark: I am sure that the whole House welcomes back the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) after his illness. He congratulated my right hon. Friend the Member for Waveney (Mr. Prior) on doing quite well without a Dispatch Box, and I pay him the same compliment.
I think that the right hon. Member for Hillhead misunderstood the comparison with France that is made by some of my hon. Friends. There was a rapid increase in public expenditure, which President Mitterrand had to reverse. That is the only criticism that we make and comparison that we draw.
We have now heard five speeches, all reasonably critical of the Budget. Later, I should like to refer to some of the good things in it, which will help. My right hon. Friend the Chancellor has been extremely skilful, taking into account the constraints upon him, in what he has done in the Budget. I do not intend to enumerate in detail all the things that he has done, but I shall mention just a few. What were those constraints? Hon. Members throughout the House know what the major constraint was. It was the cost of the miners' strike. Public sector borrowing went up and that affected the Chancellor's ability to cut taxes. If the £2·5 billion that was spent on the miners' strike had been available, my right hon. Friend could have done much more in the radical reform of taxation. Indeed, he could have increased capital expenditure. Opposition Members are in no position to criticise my right hon. Friend because of the constraints, when throughout the miners' strike they themselves did nothing at all to try to persuade the leaders of the National Union of Mineworkers to call off their political strike.
Listening to some of the speeches that we have heard, one would think that a Government could legislate for prosperity. Hon. Members in all parts of the House know that that is absolute rubbish. I welcome the parts of the Budget that will help employment. Of course we would all like to do more and put in more taxpayers' money to try to solve the problem. I remind the House that over £2,000 million is being spent in trying to do so, and next year that figure is being remarkably increased.
I accept and welcome the extension of the youth training scheme from one to two years. I disagreed fundamentally with my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) when he said that unemployment today is worse than in the 1930s. That is a travesty of the truth because there is no comparison between 1930 and today. In the 1930s, not so many married women were going out to work, and the number of people in full-time employment today is far greater than it has been—

Mr. Roger King: So is the population.

Sir William Clark: That is right.
The accusation that was made by my right hon. Friend, who has held high office, should be refuted.
I welcome the graduation in the national insurance contribution introduced by my right hon. Friend the Chancellor. The upper limit for national insurance contributions has gone up for some companies. Some people have mentioned British Oxygen and other public companies in which there are highly paid executives. The 10 per cent. extra that they will have to pay will be

allowable for corporation tax purposes and, indeed, corporation tax is reduced by 40 per cent. I should have thought that if a public company was sufficiently prosperous to pay an executive £50,000, £60,000, £100,000, £150,000 or £200,000 a year for his services, the company must be profitable, and the extra cost should not be a burden on it. However, it allows the Chancellor the flexibility of being able to reduce the national insurance contributions of the lower income groups.
No one seems to think that there is any good news, but the fact that there have been half a million more jobs in the past two years must be something to be welcomed. Right hon. and hon. Members who should know better are always denigrating the economy, which cannot help. Why do we always have to talk gloom and doom? Many things in the economy are good. I welcome the change in the unfair dismissal measures and the abolition of the wages councils. I am convinced by my industrial experience that many employers are reluctant to take people on just in case they cannot get rid of them. It is all very well taking on people when business is increasing, but if it declines, that employer is stuck.
My right hon. Friend the Chancellor envisages overspending of £7 billion for next year. It is a question of judgment. Should it be £7 billion, £10 billion, £9 billion or whatever? When critics say that we should increase the public sector borrowing requirement by £2 billion or £3 billion, the impression is given that there is no capital expenditure. However, over £20 billion of the £132 billion public expenditure is capital expenditure. That is no small figure, but listening to some of the speeches that are made, one would think that there was no capital expenditure.
I raised this matter earlier in the debate. I should like to ask my right hon. Friend the Chancellor about the interest on the national debt. I should like to know the breakdown of gross interest. The figure in the Red Book is £17 billion. I am told that that includes the indexed part of the index-linked gilts. I should like my right hon. Friend to explain that to the House.
Everyone agrees that there should be tax reform. As my right hon. Friend the Member for Waveney said, it is high time that we amalgamated the real income tax and national insurance contributions. Despite the graduation, the national insurance contribution is a poll tax and I should have thought that it should be a progressive tax, so it should be amalgamated with income tax. The right hon. Member for Hillhead mistakenly accused my right hon. Friend the Chancellor of flying kites on VAT on children's clothing, books and so on. There was no justification for that accusation.
I am delighted that my right hon. Friend has done nothing to harm the prosperity and success of the pension industry. I am convinced that it is part of Tory philosophy to help people to look after themselves. If the incentive to take out occupational pension schemes was diminished, I fear that many employers would contract back in to the state scheme, as it would be cheaper, and, in 30 years' time, more people would have only one pension.
I urge my right hon. Friend to control public expenditure. He knows that I am a critic of the control of public expenditure, in that there seems to be a weak link. Once a budget for a Department is agreed, it is left to get on with it. I should like there to be a Treasury watchdog in each spending Department. That might secure better value for money. I understood that area managing directors in the NHS were introduced to bring in expertise


in the running of that service. I was disappointed to learn recently that, out of the 13 area financial officers who have been appointed, 12 came from within the NHS and only one came from outside business. That is reminiscent of the local government reorganisation of a few years ago. Business experience in such nationalised services is highly desirable.
My right hon. Friend should pay attention to the fact that we are trying to get more people to set up in business. The proposals concerning VAT in the Keith report are important in this connection. On Thursday, I asked my hon. Friend the Minister of State, Treasury whether the taxpayer has a right of appeal. Under the suggested clauses, there is an automatic fine on the taxpayer who sends in a wrong return, unintentionally or otherwise. There should be a strict right of appeal. Although my hon. Friend said that representations will be taken into account when the taxpayer has a "reasonable excuse", I should like to know who will take those representations into account. Will it be the tax collector or an independent tribunal?
My right hon. Friend should take comfort from the fact that, with the exception of those who want to make a political point, the Budget has been well received. It could have been better, but people realise the cost of the miners' strike. Any Government would have had to resist the bully-boy tactics of that strike and no Government could have avoided spending that money. The right hon. Member for Hillhead and others know full well that if the strike had not been resisted, the country would have become virtually ungovernable without the diktat of the trade union movement. The right hon. Member for Plymouth, Devonport (Dr. Owen) made that clear throughout the strike.

Mr. Roy Jenkins: The hon. Gentleman must not misunderstand me. Saying that, with a public sector borrowing requirement of £10·5 billion this year, it is not necessary to reduce it to £7 billion for the coming year, does not mean that one would have been in favour of giving in to the miners, which I was not.

Sir William Clark: I had not misunderstood that at all. I thought that I had said that the £7 billion PSBR was a matter of judgment for the Chancellor. I also said that captial expenditure was included in that total.

Mr. Roy Jenkins: The hon. Gentleman has misunderstood for the second time, but I do not intend to take the time of the House explaining myself to him.

Sir William Clark: The right hon. Gentleman should take some of his own strictures to heart when he accuses my right hon. Friend the Chancellor of being arrogant. I do not know whether he knows the story of the pot calling the kettle black, but to say that I misunderstood is offensive and, I believe, arrogant.
I urge my right hon. Friend to resist the pressures to increase public expenditure. Inflation is down. It will have a hiccup in the new few months, but it will come back to below 5 per cent. He should concentrate on keeping inflation down, as that helps the old, the young, the rich and the poor alike. It is the best benefit that any Chancellor can give the country. The United Kingdom recovery is firmly based. I do not believe that we should change course now, so I welcome the Budget.

Several Hon. Members: rose—

Mr. Deputy Speaker (Mr. Harold Walker): Order. I must remind the House that the 10-minute restriction on speeches becomes effective at 7 pm.

Dr. Jeremy Bray: On Tuesday last week, the Chancellor said that the Government's purpose is the "defeat of inflation" and he added:
We must also do what we can to combat the scourge of unemployment.
Do we see opening up in the fundamental logic of the Chancellor the glimmer of hope that the House, the 4 million unemployed and Conservative Members who are beginning to get worried as the Chancellor's arrogance leads him into electoral disaster have been looking for? We must look carefully at the speech and the financial statement. While the Chancellor has changed the mechanics substantially since the first financial statement with which he was seriously associated—in 1980—we find that he has not deviated from his purpose. The Budget and the tattered philosophy behind it offer no hope of any relief of unemployment.
In its original form, the medium term financial statement offered a coherent, if somewhat naive, basis for Government policy. Look after inflation, it argued, and unemployment will look after itself. It rested on three theories of economic behaviour, which were especially boldly stated by the Chancellor. First, money supply determines money incomes. Secondly, by controlling money income, one controls inflation because output will look after itself with markets clearing on their own and genuine job seekers finding jobs. Thirdly, the exchange rate will adjust to reflect demand for money in different currencies, and hence the price in different countries will maintain a constant level of competitiveness.
Most of that has been abandoned. The only dogma that remains is the self-balancing economy — markets clearing of their own accord. Even that is now heavily qualified by blaming unemployment on market imperfections such as employment protection and wages councils, which are to go by the board.
What has gone wrong with the Chancellor's logic? First, money supply does not determine money incomes. The first glad, confident statement in 1980 did not mention the exchange rate or money incomes, but said that there would be no question of departing from money supply policy, targets being set broadly for four years ahead. Money supply targets for later years are now described as "illustrative ranges" based on assumptions about the growth of money GDP, which appears for the first time this year. There is no confident setting of expectations here.
The money supply targets on their own cannot be trusted to give the right message. The exchange rate has now forced itself inescapably on to the scene and the financial statement argues that we must
balance the appropriate combination of the exchange rate and domestic monetary growth needed to keep financial policy on track." — [Official Report, 19 March 1985; Vol. 75, c. 787–89.]
What is this "financial policy" about which the Chancellor speaks? Is it distinct from "domestic monetary policy"? Has it anything to do with the gross loss of competitiveness which wrecked British industry in 1980 and 1981? No; it is a balance that the Chancellor says must be struck in a way that takes no chances with inflation. In other words, he clings to the strategy of boosting the


exchange rate to fight inflation, rather than pushing it in the direction needed to maintain full employment. The theories, targets and mechanisms of policy are all gone. Only the smile on the rather ugly Cheshire cat remains —the purpose of fighting inflation, whatever the cost in lost output, misery and unemployment.
The latest twist is that, as the cost escalates, it is transmuted into a measure of the depravity of the evil that the Chancellor believes must be dealt with. The greater the cost, the greater the evil must have been. Therefore, it is a self-confirming self-righteousness. The Chancellor put it well at Question Time when he said:
Stable prices … is the greatest social service that any Government can provide."—[Official Report, 21 March 1985; Vol. 75, c. 973.]
The worry that lurks on Conservative Back Benches is that such priggishness loses elections, even if it is convenient in the City. Conservative Members are looking across the Atlantic and asking, "Why not let the fiscal balance rip, cut taxes and keep the money supply and inflation in check with high interest rates?" The Chancellor conceded that there was nothing sacrosanct about the precise mix of monetary and fiscal policies required to meet the objectives of the medium-term financial strategy, but said that this was not the year to make adjustments in either direction. He repeated the suggestion yesterday on "Weekend World".
The fact is that the Chancellor has not the faintest idea what would happen if he let the PSBR rip. He fears that it would result in the pound plummeting and interest rates rising not to 16 or 17 per cent. but to 25 or 30 per cent. and still not holding the pound. The Chancellor is not now prepared to take that gamble, although he has kept that option open for the last full-year Budget before the general election, when he hopes that the pound will be stronger and when, in a losing position politically, he can blame any fall in the pound on fears of a Labour Government.
If that record has spelt the end of the Government's financial strategy, what should we do? We need a balanced pursuit of objectives, which recognises that in all practical respects the economy is not self-balancing. If we do not seek full employment, we shall not get it. If we do not seek stable prices, we shall get inflation. If we do not seek growth, we shall get stagnation. We can and must seek them all with an appropriate balance between them.
The right hon. Member for Waveney (Mr. Prior) put it well when he referred to Iain Macleod's simile of the juggler having to keep three balls in the air at the same time. That is a good analogy. An even better one is flying an aeroplane in which, if any one direction of control goes wrong, the aeroplane goes into a spin. An apparatus is needed to keep the economy on an even keel. Nowadays it becomes a matter of technical argument, which is pursued effectively in Select Committees, but with only partial access to the facts and the analysis. The Chancellor takes delight publicly in rubbishing that apparatus of information, models, and the way to use them, while in private he creeps round to consult them and tries to rig the oracles of Delphi to his persuasion.
In a wiser and more dispassionate moment 10 years ago, the Chancellor, on Report on the Labour Government's Industry Bill in 1975, voted for an amendment, which I moved, to make the Treasury model available to the public and requiring the Treasury to publish forecasts, of which we have the latest in the financial statement. That has proved a mildly useful

exercise, but we now need to take the further step not only of making the models available for test in the macro-economic centre at the university of Warwick, but of applying those models to the analysis of their policy implications. The House is taking that further step by setting up a parliamentary unit at the university of Warwick to work alongside the bureau which tests and compares the models. The parliamentary unit takes the further step of testing and comparing the policies implied by the models for Select Committees, individual hon. Members directly and through the Library. I hope that the Chancellor will show the self-confidence to instruct the Treasury to co-operate fully with the parliamentary unit so that it can be used to defend and criticise the Government's policy and the alternatives.
I am reasonably confident that the Government's policy will stand condemned. The Chancellor will take a different view. He should join the argument, put forward the evidence, let it be searchingly examined and let Select Committees and hon. Members see what the score is.
I am not for one moment suggesting that analysis is everything. We must deal with the challenging and difficult political and moral problems that we face. If we look at the wider political and moral problems, there is no doubt that in the major departures which policy must make, we need the best analysis available.

Sir Edward du Cann: In view of the time constraints, I hope that my right hon. Friends, who are not present in any case, will be good enough to take the compliments as read. I shall confine myself to two points, on which I may expand on another occasion.
First, as I sat in this crowded Chamber last Tuesday, I reflected, not for the first time, that our Budget day arrangements are becoming increasingly a farce. It cannot be right that the speech of the Chancellor of the Exchequer is almost wholly occupied with a series of detailed announcements about this tax measure or that piece of administration. There are huge issues to discuss, and one looks to the Chancellor to lead the discussions about the decline in the British share of world markets, competition issues, which are now so unfairly fierce on the United Kingdom, exchange rates and so on. In 1963, we made an attempt in that direction. These detailed matters, such as revenue, should in future be confined to the debate on the public expenditure White Paper, and the Budget day debate should be used for the much more serious matters of the national and international economic context in which we live.
My second point deals with the supply side measures announced by my right hon. Friend. They are praiseworthy and will have an effect. In aggregate, his attempt to encourage labour mobility, his determination to achieve better training and his practical measures to make it easier to employ people are wholly admirable. Not for the first time, I avow that unemployment is a curse and degradation for our people. My right hon. Friend could and should have gone further in his attempt to alleviate those problems.
I shall put a single specific proposal to my right hon. Friend. I am one of many hon. Members who have consistently drawn attention to the habit of Governments to spend too much on items of current expenditure and too little on capital projects. When it comes to discussions in Government about levels of expenditure, the capital


programmes always seem to be at risk and the administration sacrosanct. Year after year, the Select Committee on the Treasury and Civil Service has quoted figures that show an inadequate level of capital investment. The Government's expenditure plans for 1985–86 to 1987–88 show that that trend continues. By 1987–88, public capital spending will be 12 per cent. lower in real terms than in 1984–85, while current spending will have increased by 0·5 per cent.
As hon. Members on both sides of the House have said, it is essential that capital investment is increased. It could easily be increased. There is something farcical in circumstances which permit a company in the private sector to spend whatever sums it thinks appropriate on capital items, while a water authority, my local authority in Taunton or, indeed, the Government, are highly regulated.
If it is right to transfer functions in the current expenditure category to private enterprise in the interests of economy, it must be right to transfer capital expenditures. Let corporations in the private sector build schools and hospitals — of course, to a specified standard. Then the users — the local education authorities and the regional health authorities—can pay rent adequate to service the capital cost and to amortise the debt. The debate of which we have heard something across the Floor of the Chamber this afternoon — tax cuts versus public investment—is a sterile debate. We are perfectly able to have both if we want them, and both are certainly overdue.
If the logic of my right hon. Friend's approach to his Budget is the containment of public expenditure, this proposal would assist him. If the object of his detailed measures is to facilitate employment, the removal of the shackles on the construction industry would provide many jobs and reinforce his purpose. There is enough spare capacity in the construction industry for it to expand hugely without inflationary pressures.
I do not know what the position is in other constituencies. I can say only that my constituency has been waiting 30 years for a new hospital, which is too damned long. Many schools in Somerset are old, and I could give the House a long catalogue of essential works which I long to see started in my constituency and county. I am sure that every Member of Parliament could do that. It would include bridges, barracks, sewerage works, courts, swimming baths, sports arenas and offices. The list is endless, but it could and should be started.
I find myself asking the question: what are we in the House of Commons? Are we mere talkers and nothing else, or are we doers? We need a little imagination and a little determination. I will give the House a slogan which is perhaps not inappropriate: there must be a way to find work for our people, to replace despair where it exists with a new confidence, and to encourage new growth in our economy and new dynamism. We boast about the growth in our economy, but it is pretty trivial when one stops to think about it. Only an expanding home base will give us a chance to expand our export capability to any real extent.
I do not know what right hon. and hon. Members think about such matters and about the present economic scene. When I saw my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) sitting in that seat today, I was reminded of the time when Winston sat there, and

something that he once said went through my mind. He said that to destroy can be a heedless act of a moment —although sometimes destruction is deliberate—but to build is more often the hard and, at times, unthanked labour of weeks, months or even generations. If I have an ambition, it is that the people outside will see us as the builders. There is no reason why we should not be.
I hope that the Minister of State, Treasury will ask my right hon. Friend the Chancellor seriously to consider the idea that I put forward. I am not without experience of raising money in the City and of applying it to constructive purposes. Why should not those things be done? What is holding us back?
Those are the items which I would sooner have us discuss than a few pennies on whisky or a few pennies off the rate of our individual taxes. It is time that the House gave our people a lead, and it is overdue for us to inculcate in their breasts the idea that there is, as there should be, hope for the future.

Mr. Robert Sheldon: The right hon. Member for Taunton (Sir Edward du Cann) talked about the trivial rate of economic growth, and many will echo what he said. He also deplored the treatment of capital expenditure by an expenditure-cutting Government. Only the 10-minute rule prevents me from following the right hon. Gentleman into those important areas, which we shall have to discuss in greater depth in the months to come.
I wish to deal with the sort of Budget that we might have expected from this Chancellor of the Exchequer. We all know what sort of a person he is. He has a clear vision coupled with clear intentions, and he has a strong determination to match both. Sometimes he has seemed to have a mission—almost a messianic mission—to carry them into effect. As such, he has been, and I suppose he has seen himself as, the most important executive arm of a theoretical and over-doctrinaire Government. Others in the Conservative party might dream of a world fit for entrepreneurs to live in; it has been his goal to turn it into reality. So determined was he, that at one time during the Labour Government he proposed an Act of Parliament removing from the Government the control of money supply and placing the power in the Bank of England and outside the control of the House of Commons.
That enthusiasm, which as a rule is unusual in this moderate Chamber, found its outlet in the work that the Chancellor did at the Treasury. As the architect of the medium term financial strategy of 1980, as my hon. Friend the Member for Motherwell, South (Dr. Bray) said, he prepared the foundations of an economic plan that was intended to liberate the energies of our wealth creators and to remove the distortions which he believed prevented them from achieving a much higher standard of living and a much greater economic success for them and the entire community.
Therefore, it was his intention, as we all know, to undertake a comprehensive programme of tax reform which would remove many of the allowances and incentives which the Chancellor believed distorted the operations of the free market. So we had the leaks which started in the autumn and went right through the winter, to the effect that we had a tax-reforming Chancellor and that there would be big changes in taxation. The pension kite was flown, as were the balloons of VAT impositions.


None of this was a surprise. We have known for a long time what the Chancellor wished to do; we were simply unsure about the details. The leaks did not supply information, they provided confirmation.
When nothing happened on Budget day, we had to ask, what was all the fuss about? What happened to that long shopping list of tax reforms? It seems that even the Treasury was misled by the reforming Chancellor turned conventional politician. In column 794 of Hansard of 19 March there is the heading, "Tax Reform", but it is a title without substance. The same heading appeared in last year's Budget, but it related to stamp duties, life assurance, friendly societies, investment income surcharge, composite rate, corporation tax, capital allowances, stock relief and much more. That was tax reform. This time we had the same heading, but there was nothing there.
We know what the Chancellor wished to do because we know him. He wanted to abolish capital gains tax, to tax pensions—especially lump sums—to broaden the base of VAT and to reduce or even end stamp duties, and he would dearly love to make inroads into mortgage relief. For the latter, he would find much sympathy in parties other than the Conservative party.
Many of those exemptions, totalling about £14 billion, were expected to be challenged so that the Chancellor could begin to achieve his dream and his destiny of a fundamental change in personal taxation. That did not happen, and the question must be, why not? He said that he was boxed in, and we must ask, who boxed him in? It was not the miners' strike; it is only a small cost for 1985–86. Was he boxed in by the problems related to international confidence? Would international confidence wane if VAT was placed on pension lump sums? Would overseas investors withdraw their funds from London if VAT was placed on food? Of course not. The confining of the Chancellor had nothing to do with miners or with overseas investors. The person who boxed him in was the Prime Minister, with her political instinct that tax reform has had its day.
Nicholas Kaldor, now Lord Kaldor, used to say that tax reform was of interest to Governments for a maximum of two years, and after that time, they started thinking about the next Parliament and lost interest. Therefore, instead of the tax reform we expected from the Chancellor, we got a Green Paper or White Paper that will enable him to do nothing at all. Every Government reach a point when electoral politics takes over from economic doctrine. The interesting aspect of this case is that the economic doctrine was so firmly embedded. This Budget is a marker that this point has been reached.
At each Conservative Budget, we have had the ritual chant about the monetary aggregates. The more sophisticated they become, the less the Government and everybody else believe them. Who cares what sterling M3, PSL1 or the money GDP are, or what they are as criteria? They are not the guide to future levels of inflation.
Although the Chancellor happened to throw a bone to Sam Brittan by including a further monetary table of money GDP, will he take any notice of it? He will not. That is all past. This is all said to ease his conscience and the transition from what he believed in the past to what he has to do in the future. Monetarism was meant to do everything to exclude Governments from unpleasant decisions on pay, prices and the exchange rate. Instead,

the Chancellor is busy exhorting the trade unions and everybody else, as previous Governments have always done.
The best quote of last week came from the right hon. Member for Chesham and Amersham (Sir I. Gilmour):
Professor Phelps Brown put it a shade ironically a year or so ago: 'Monetarists urge trade unionists to make monetarism work.' Not surprisingly, they are not wildly enthusiastic about ding that." — [Official Report, 21 March 1985; Vol. 75, c. 1037.]
We have to get rid of the talk and start the real action. We must turn our attention to that.
I am able to deal with only one other aspect of the Budget—national insurance contributions. Here, I can offer the Chancellor a few plus marks. After all, he has turned what used to be a regressive tax into a mildly progressive one. I am pleased about that. However, the Chancellor is expecting rather too much from these changes in their effect on employment. Had they been allied with other positive measures to expand the economy, they would have found a useful and sensible place.
I hope that eventually there will be an amalgamation of national insurance contributions and income tax; the hon. Member for Croydon, South (Sir W. Clark) mentioned this. Perhaps the Chancellor will now turn his attention to progression in the rates of income tax and say that he will introduce reduced rates in income tax as computerisation allows it. If it is sensible to reduce rates for national insurance contributions, it is also sensible to have reduced rates for income tax. All this is being delayed until the computers are installed, and we look forward to seeing it then.
This is a sad and unimaginative Budget, which will do nothing for the unemployed. It is the second Budget that has been heralded as a Budget for jobs. The last one increased unemployment by 100,000. This one is likely to increase it still further. Eventually, we shall have to have a real Budget for jobs, and when we do, which is not likely to be in the lifetime of this Government, the unemployed can take hope from a Government who realise the true importance of unemployment as it exists today.

Mr. Lewis Stevens: This Budget is more practical and progressive than it has been given credit for. In particular, with its effect on national insurance contributions and training and its approach to high technology demand, it is a good one. I commend it more than many hon. Members have as being a useful Budget. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) spoke about my right hon. Friend the Chancellor being boxed in. No one would question the fact that over the past 12 months there have been many difficulties and events the effects of which could not have been foreseen, nor the extent to which they would affect Government spending.
My right hon. Friend the Chancellor's consistent approach should not be confused with being in a straitjacket. It is the disciplined approach to how Budgets are introduced and monitored, which many Labour Members have thought was a straitjacket, and which many previous Chancellors have refused to carry out. In many past Budgets, previous Chancellors have attempted to inflate. When that did not work, there was panic action to do something different. However, with this Budget, as the


year goes on, with a reasonable, stable and disciplined approach, changes will take place just as the Chancellor has decided. That should not be overlooked, as it is one of the most important parts of my right hon. Friend's approach. It has been called dogma, but many people do not like the word "discipline".
The measures on high technology and the encouragement of more graduates are a small beginning. Various hon. Members, including my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath), have set out the things that they think should be done. My right hon. Friend said that after the last world war we did not want to see the 1930s return. What happened in the 1950s, the 1960s and the 1970s? Our share of world trade dropped by over 50 per cent., but successive Governments took few measures to introduce and encourage the new technologies. It is to the credit of this Government that they have recognised the great dependency of new technology on training and more graduates. Something has been done about it. However, in the past 10 or 15 years, under previous Governments, nothing happened. It is hypocritical to claim that the Chancellor has not done anything.
My right hon. Friend the Secretary of State for Trade and Industry told the House how many things have been covered in the Budget and spoke about recent steps taken by the Government. It is not good enough for the Opposition and some of my right hon. and hon. Friends to say that what the Government have done is not enough. It may not be all that we should like to see and it may not be sufficient at this stage, but it is all that we can expect at the moment and more than has been done by many in recent years.
The same responsible approach will help some of our industries. The most troubled industries are in manufacturing. That has already been said this afternoon. Government measures should be extended to that sector. However, claims have been made for more money for infrastructure. Manufacturing, the depth of the recession and the wilderness in the west midlands have all been mentioned, but always money is asked for infrastructure. Future Budgets and measures by the Government should be aimed, first, at manufacturing, where jobs could be created, and then at infrastructure.
If we release the money that, by the disciplined approach, we may have, it should go directly to manufacturing, with direct help to manufacturing industries so that they may produce the wealth first and we can follow by investing in the infrastructure. The reverse process is a gamble. The Government should try to help the high-risk industries, but unless the Government have a reasonable, stable money approach, they will gamble, as past Governments have done, by putting money in. Governments are not there to take such risks with taxpayers' money. They are there to control the money carefully and to release it when necessary. That is not what we expected before, but we can expect it with the Chancellor's approach to this Budget.
It is also said that we need high-wage, high-productivity manufacturing industry. That is absolutely true, but during the past 10 years we have been moving from high-wage, low-productivity manufacturing industry. That is why we face so many problems and why many doubt whether we can reap the full benefit of any release of money into the economy. To do so will require

further dramatic changes in the style and approach of industry. The trade union movement has a part to play in that change — a point that has already been made in today's debate. The Budget strategy will allow such a change to take place. Low wages will not bring about that change, but less restrictive controls upon industry will lead to industrial progress.
The abolition of the wages councils has been severely criticised. To abolish the wages councils without providing alternative protection for those who are protected by the wages councils would be wrong. Many of the industries in which they work are fragmented. Very little protection is provided, other than by means of the wages councils. The trade unions are unlikely to be able to provide protection. In certain instances it would be difficult for this group of people to join trade unions. Unless an alternative to the wages councils is provided, it would be wrong to abolish them. They ensure that modest levels of income are fixed. Without the protection provided by the wages councils, there will be further exploitation. There is a certain amount of exploitation now, but it is small. The abolition of the wages councils would provide an opportunity for further exploitation. Therefore, it would be a backward step to remove such protection.
I welcome the fact that the Budget demonstrates that we are beginning to gain control over borrowing. The Government have been criticised for not spending as much as they ought to spend. Their critics say that credit is a good thing and that businesses survive by credit. That is true, but all borrowing has to be contained within limits that can be measured. If one continues to borrow, there comes a time when it has to be paid back, which can be very difficult if one has borrowed too much. Many right hon. and hon. Members would gamble on a high risk strategy, with no guaranteed results. I believe that the Chancellor has followed a disciplined approach, in a difficult set of circumstances, which will provide this country with an opportunity to build a flexible strategy which will create jobs. I am far more optimistic about the results of this Budget than I would be about anything that has been advocated by the Opposition.

Mr. A. E. P. Duffy: The Chancellor's second Budget is a missed opportunity. It may have nudged anti-unemployment incentives in a more sensible direction, but politically it is a cautious Budget, and that is likely to prove its main mistake. Under the Prime Minister, Britain is going into a fifth successive year of growth with low inflation and has pulled up the European Community's league of economic performance, but this has been achieved on the back of unemployment which is far too high. This year, therefore, if only for electoral reasons and the Government's own timetable, a dramatic assault on unemployment is clearly called for.
The House will welcome the cut in national insurance contributions and the raising of the level at which people start to pay income tax. However, that is pretty small beer. Anybody coming off the dole to take a job for over £35·50 a week will still be paying 5 per cent. national insurance, not just on the pounds that he earns above £35·50 but on his whole meagre income. Worse, these changes will not reduce hard-core unemployment very much. Therefore, the jobs that the Chancellor will create will typically go


to school leavers and part-timers—no bad thing—but the growing problem of families with no breadwinner is scarcely touched by this Budget.
The well-off are the only significant beneficiaries. The Chancellor has left a man on the dole marginally worse off if he smokes and enjoys a pint. Whitbreads in my constituency, as well as my working men's clubs—one of them was fearing the bailiffs only today—will find unacceptable the raising of duty on beer by 7·5 per cent. compared with inflation of 5 per cent.
Although almost everyone in a job is better off than when the Conservatives took office in 1979, the gap between rich and poor has widened considerably. The council manual worker finds his spending power down by 1 per cent. and an unemployed man has to make do with 18 per cent. less than in 1979. The senior manager, on other hand, has 22 per cent. more to spend and the company director 35 per cent. These are examples of "typical" people included in the 1985 version of the annual Budget survey of household income conducted by the Institute for Fiscal Studies.
Moreover, the Budget give-away of £730 million contrasts rather sadly with the £2 billion predicted in the last Budget and with the £6 billion we might have hoped for after the revised forecasts for North sea oil revenue. The Chancellor would have had more room for tax cuts if the had tackled the tax privileges of the pension funds and mortgage holders. The proceeds could have been used to take more of the lower paid out of tax and national insurance claims altogether and to finance some worth-while public investment. Instead, the Government were frightened off by the rumblings of their own Back Benches where the Conservative middle classes are too well represented, as we heard in the speech of the hon. Member for Croydon, South (Sir W. Clark).
As a result, the Chancellor has to confine himself to tinkering at the bottom end of the labour market. But Britain faces an unemployment crisis which requires more drastic measures, as the right hon. Member for Old Bexley and Sidcup (Mr. Heath) argued, if the country is not to be saddled with an army of the permanently unemployed. The emphasis instead has been almost wholly on the supply side, with the recipe of better training, greater labour mobility and providing opportunities for people to price themselves into work. But there is nothing in the Budget in the way of encouraging demand through public works programmes or public investment of any kind.
The problems to which the Chancellor should have addressed himself take two forms. One—already with us—is the socially divisive level of unemployment. The second is the threat to the living standards generally of both the employed and the unemployed. The latter, if not faced, will guarantee that the level of unemployment goes on growing even higher.
The present threat to living standards is obvious in the case of the unemployed, less so in the way that the rundown in the standards of the public sector affects everybody to some extent. Further investment in the public sector would protect standards of service in everything from health to education to sewerage.
The major defects of the Budget are, first, that it fails to make an impact on the 4 million or so without real jobs, and, secondly, that it fails to prevent a remorseless rise in future years while industry continues to shed labour as the effects of the microchip take over from recession.

Meanwhile, Britain's infrastructure, already in a serious state of decline according to the National Economic Development Office, will be in an even worse state.
The problem will have to be tackled some time. It will not go away. Why not do so now while there is so much unemployment and when the cost to the state will be less? Reduced borrowing will not build roads and bridges; nor will it restore devastated industrial areas such as my own constituency in the east end of Sheffield or throughout the whole of south Yorkshire. We heard from the right hon. Member for Taunton (Sir E. du Cann) a catalogue of similar infrastructure needs in Taunton and Somerset. Let me offer to the House, Mr. Deputy Speaker, just a few from south Yorkshire. The economy of that area has suffered as a result of the recent coal strike. Its spirit and people have suffered. That comes on top of a decline in the traditional industrial base of the area and a larger than the national average unemployment figure.
It is difficult to exaggerate the scale of industrial devastation in the lower Don valley. Special steels and heavy engineering dominated the east end of Sheffield for 100 years. The collapse of those sectors and the faltering attempts to rationalise for survival have been principally to blame for the state of the valley today. Of the 42,000 jobs, nearly 19,000 have been lost since 1977. Factory closures have left large tracts of vacant and despoiled land and millions of square feet of empty, often semi-derelict buildings. The immense economic problems so apparent in those 2,000 acres of industrial Sheffield have been caused nationally and internationally.
It is right that the people of that area should be able to ask for help in their predicament. Much of that predicament is not of their own making. It is right that they should look to the Government to come to their aid. What the area needs quickly is some major investment, some help with its immediate problems, and some aid to rebuild our once strong local communities. That could come with Government help.
The area was once a proud powerhouse of the nation's economy. It has made enormous efforts to cope with the problems of decline, market forces, world-wide recession and all the other problems affecting it. It deserves some help in its great struggle, whether it be cash for inner-city projects, for roads and for hospitals or a benevolent Government attitude to grants and benefits. It is within the power of the Government to help. Why will they not do so?
The Chancellor's PSBR of £7 billion is too little to provide for the restoration of these areas by about £3 billion. He could still permit a modest public works programme and, incidentally, underpin his supply-side approach. Instead, he has turned his back on public sector borrowing, even for eminently sensible infrastructure projects that would produce major gains in terms of economic and social welfare. He has abandoned old, honoured, now devastated industrial areas such as south Yorkshire.

Mr. David Atkinson: There was so much hysteria in advance of my right hon. Friend the Chancellor's Budget this year that when he stood up to make his statement last Tuesday I was reminded of the opening words of Rudyard Kipling' s excellent poem "If'. It is on my wall in my office in Norman Shaw north. It begins:


If you can keep your head when all about you
Are losing theirs and blaming it on you …
You'll be a Man, my son!
I congratulate my right hon. Friend on keeping his cool, as his predecessor always did, and introducing a sound, businesslike Budget that can only enhance our economic recovery. I am particularly pleased that he has not even partially attempted, in the words of my right hon. Friend the Member for Waveney (Mr. Prior), to weave and turn to satisfy those who have urged higher public expenditure and/or borrowing to creat jobs which would last only until the money ran out.
Nothing could be more damaging to our prospects. It would have shown that we had learnt nothing from the lessons not just of the past 20 years in Britain but of more recent experience across the Channel in Mitterrand's France. I realise, in saying that, that the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) rightly anticipated that, as a loyal Back Bencher, I was playing the French card.
Instead, my right hon. Friend has chosen to take further measures to create a more favourable climate for enterprise to flourish. He has removed even more obstacles and disincentives to employment and we are promised a package of further measures to help small businesses and the self-employed. In all those respects, this is a Budget for jobs.
Small business men in my constituency have particularly welcomed the VAT relief on bad debts, the tax relief on clause 4 contributions by the self-employed, the two-year qualifying period for unfair dismissal, and the forthcoming consultation document on the future of wages councils. Those are all measures that small business men have been urging on me for years.
My right hon. Friend was right to say that wage councils have contributed to the present unemployment. I have in the past in the House referred to evidence which I have received from small businesses and traders in my constituency, particularly bakers, caterers and those in the entertainments industry, about the effect that over-inflated wages council awards have had on the numbers that they employ. Their business judgment will not allow them to pass on the extra costs in higher prices, so they have had no choice but to shed labour.
Like others in the debate, I am not calling for the outright abolition of wages councils. We should consider the alternatives outlined in the Green Paper. We should also take into account the recommendation of the Auld report on late night and Sunday trading that if all legal restrictions on opening hours were abolished, as the report recommends, the existing wages councils machinery could be extended to ensure satisfactory conditions of employment.
I welcome the additional £43 million over the next three years for the provision of engineering and technology places in higher education to meet the anticipated shortfall of graduates, as foreseen by the Alvey directorate. Has similar consideration been given to the education and training of those preparing to enter the British tourist industry?
During the debate on Wednesday, my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) reminded the House that the tourist industry is not just the largest employer in the country but one that creates jobs in other

industries. It also offers one of the greatest potentials for expansion, because Britain is one of the world's most attractive holiday islands. We are still not offering the kind of service and value for money in our tourist industry which satisfies foreign visitors and which will keep more British people from going abroad. It is not just the British climate and it is not VAT, as many in the industry suggest, which encourage people to go abroad. We are still short of professionalism and service in our tourist industry. I want to see more resources going towards training and education in our tourist industry, as well as increased funds for section 4 grant aid.
I welcome the raising of income tax thresholds by 5 per cent. more than inflation so that many more people will no longer pay tax at all, but I regret that my right hon. Friend did not have enough scope to reduce the basic rate of income tax this year. He would have had more scope if he had broadened the base of VAT. I shall be honest enough to say that, if he had done that, he would have had my support.
There is speculation that my right hon. Friend may have more to play around with next year. If so, I hope that he will adopt the same strategy that he adopted last year with the phased reduction of corporation tax, and introduce a phased reduction in the basic rate of income tax from the present 30 per cent. over a stated period to a basic rate of 25 per cent. That will enable working people to benefit in a perceived and measured way in our growing prosperity.
Perhaps such an option could figure in the forthcoming Green Paper on the opportunities for reform of personal income tax arising out of computerisation. I hope that that Green Paper will also refer to two opportunities which computerisation will make possible—the introduction of a tax credits scheme, which it will be recalled was the subject of a Green Paper as long ago as 1972, subsequently endorsed by a Select Committee the following year; and the introduction of local income tax as a replacement for domestic rates, for which so many of my hon. Friends have been calling and which, certainly until recently, was the official policy of the Labour party.
It will be recalled that the 1982 Green Paper on alternatives to rates pointed out that a local income tax could be introduced only following computerisation of the income tax system. Local income tax offers by far the fairest and most efficient alternative to rates.
I end on a whinge which I have repeated in all previous Budget debates. Instead of raising the VAT threshold by £750 as a mere adjustment for inflation, as my right hon. Friend the Chancellor of the Exchequer has done, he should have displayed his characteristic boldness by raising it to a far more realistic £50,000 or even £100,000. In so doing, he would have relieved about half of the businesses currently registered for VAT, as well as all those new businesses to come, from the hours that have to be spent filling in forms for the VAT man when those business men should be working to start or expand their businesses.
Such a measure, along with the higher thresholds announced last Tuesday in income tax and the lower national insurance contributions, would go a long way towards reducing the black economy. In so doing, it would reduce the need to employ quite so many VAT inspectors to investigate evasion and abuse and would reduce the amount of time taken up by courts in dealing with offenders. It would not result in any significant reduction in revenue, since the administration cost of collecting


VAT on those businesses is more than 80 per cent. of the yield. Any revenue lost would be more than made up for in extra income and corporation taxes on increased profits and by the fact that people would come out of the black economy.
I shall be reminded, as I always am, that we have to obey article 24.2(c) of the EEC sixth directive. But what have my right hon. Friend the Chancellor and his team done to try to change that directive on behalf of all the small businesses in the Community? I am talking about one measure that he could introduce next year, which would cost him virtually nothing, but which would, at a stroke, free thousands of small businesses from the requirement of having to satisfy bureaucratic red tape in order to get on with making a success and a profit from which more jobs can flow. I hope that my right hon. Friend the Chancellor will bear that point in mind when considering what can be done in next year's Budget.

Mr. Bruce Millan: The hon. Member for Bournemouth, East (Mr. Atkinson) is the only Member to have shown any enthusiasm today for the Budget. There is little enthusiasm for the Budget outside, and there is an overwhelming feeling in the country that the first priority of any Government must be to tackle the appalling and increasing level of unemployment.
The Budget, which is ironically described as a Budget for jobs, will do nothing to reduce the level of unemployment. The Chancellor of the Exchequer made some play of the increases in personal allowances being above the rate of inflation, but from the individual taxpayer's point of view, those increases are trivial. We are talking about literally pence per week. Given the increase in mortgage interest rates, the increases in rates, particularly in Scotland where there will be an increase of more than 20 per cent. this year for domestic ratepayers, and the increases in charges for the NHS, electricity, gas and so on, even if someone is lucky enough to be in work, he will be a net loser as a result of the Government's actions in the Budget and in other announcements.
The Government say that they have not got a pay policy, but they should tell that to the teachers in England, Wales and Scotland who are on strike precisely because the Government have a pay policy that is applied extremely stringently and unfairly in the public sector. But as I have said, for the individual taxpayer, the increases in the tax allowances are trivial.
However, our major complaint is that the Chancellor's terms of reference were completely wrong. In particular, he allowed himself to be constrained, or boxed in, by attempting to reduce the PSBR in 1985–86. Given the general needs of the economy, what he is doing is not only economically but morally wrong, and quite shameful. The sooner we get away from the Government's absurd preoccupation with the PSBR — which is now found practically nowhere else — the better. One of its absurdities is that it is in any case only a balancing operation for the vast amounts of expenditure and receipts that total about £150 billion per year.
In 1984–85, the PSBR stood at £10·5 billion. We were told that that was not intended by the Government, and that it was the result of the miners' strike. Yet the Government boast at the same time that that strike was a worthwhile investment. In any event, the increase in the PSBR has had no significant effect in terms of inflation or of affecting

confidence in the money markets, and so on. The Chancellor argues that it is perfectly possible to run a PSBR of £10·5 billion by default in 1984–85 without any real damage being done to the economy, while at the same time saying that he must reduce it to £7 billion in 1985–86. As a result, he is unable to make available the public expenditure that is desperately needed if we are to get the economy moving in a way that holds out any prospect of reducing the appalling level of unemployment.
If we can spend £2·5 billion to £3 billion on combating the miners, we can spend more than that on putting productive resources back into the economy. That is what the Budget should have done. However, the Chancellor was unwilling to do that, so the Budget, far from reducing unemployment, will considerably increase it in the next year or so.
There is no lack of ideas even on the part of Conservative Members. Hon. Members have put forward their ideas for spending money on essential public facilities such as housing, roads, hospitals and so on. In addition, we could get the Government off the backs of local authorities. We also need to spend more on industrial development. Yet in 1985–86 there are to be cuts in regional aid. As a result, about £450 million will be saved. All that money will come from areas with high unemployment, where additional rather than reduced expenditure is vital if we are to get people back to work.
The manufacturing sector of the economy shows the extent of the decline in the past five years. We need additional expenditure and additional schemes for that sector of the economy. The Secretary of State for Trade and Industry announced several items today, but when he was challenged about the announcements on, for example, industrial innovation he had to admit that in 1985–86 Government expenditure would be lower rather than higher on such innovation. It is positively offensive that a Secretary of State for Trade and Industry, who is supposed to be responsible for industry in this country, should be so complacent about the decline that has taken place in the past few years in our manufacturing sector.
The Chancellor has boasted about investment being at record levels in 1984–85. But investment in manufacturing industry is still considerably below the 1979 level, despite the fact that particular incentives were written into the 1984 Budget. They should have meant a considerable increase in investment in 1984–85 at the manufacturing end of our economy. That increased investment has not happened, despite the taxation changes in the 1984 Budget. When the changes work their way through, they will damage, rather than improve manufacturing investment in 1985–86 and in subsequent years. According to the Red Book, investment is estimated to increase less in 1985–86 than in 1984–85.
I am using the Red Book and not selecting extracts from Government statistics as the Secretary of State did earlier. It is estimated that the deficit in 1985 in manufacturing on the balance of payments will be £4·5 billion. That is after the miners' strike has ended. In 1984, the figure was £4 billion and in 1983 it was £2·5 billion. If it were not for the oil contribution to the balance of payments — estimated at £10 billion in 1985—we should be running a deficit of about £7 billion.
The Secretary of State talked about the increase in exports in 1984. He did not say that that was the same as the increase in the level of world trade in 1984. All we did,


despite devaluation, was to keep pace with world trade. In spite of the mere 5 per cent. increase in domestic demand, there was a 10·5 per cent. increase in imports in 1984.
The picture for manufacturing is gloomy, basically because much of our industry has been destroyed. Even when an upturn in the world economy arrives — the sooner the better—much of our industry will no longer be there to benefit.
All this has happened despite the advantages of North sea oil. Ministers in particular tend to devalue the contribution made by North sea oil but, as the Red Book demonstrates, North sea oil accounts for about 6 per cent. of GNP. That is not a trivial contribution. Despite all the advantages of North sea oil, manufacturing is declining. The economy as a whole is declining, and the Budget holds out no hope for the unemployed.

Mr. Ralph Howell: I have looked forward to a truly radical reforming Budget for nearly 15 years and I do not pretend that I am very enthusiastic about this Budget. However, I am grateful to the Chancellor for certain aspects. I am grateful to him for standing his ground, for maintaining his firm policy and for ignoring the false advice from Opposition Members and from some of my misguided right hon. and hon. Friends.
This has not been an easy year. Not only have we had to bear the cost of the miners' strike, but also the distraction caused by it. The Chancellor has tried to give as much help as possible, within the money available, to provide tax relief and to change the national insurance system.
The big problem is that we have not got on top of public expenditure. During the censure debate in January, the Prime Minister said that the United States devoted 10 per cent. less than we did to public expenditure as a proportion of GDP. In the Macmillan era, when we knew that we had never had it so good, we were spending 10 per cent. less. The Prime Minister reminded us that the last Labour Government, when they were being manipulated and ruled by the IMF, made a cut of £10 billion in today's terms in public spending. Until we can think in such terms we shall be over-taxed and, because of the sheer weight of government, less competitive.
I shall explain what the Chancellor should have done despite the problems confronting him. He is not as hedged in as he thinks. The problem is that he feels he is hedged in by a number of sacred cows. One of these is child benefit. Why on earth do we tax people so heavily and give child benefit across the board? If we gave child benefit only to those who need it—those who earn only two thirds of the national average wage—another £3 million could be found for tax cuts. That would hurt no one. We take £25 a week in tax and national insurance from a family with an income of £110 a week and give £25 back in child benefit, housing benefit, and so on. There can be no sense in that.
If we means-tested child benefit so that those who earn more than two thirds of the national average wage did not receive it, and made corresponding tax cuts, everyone would be better off and bureaucracy could be reduced.
The same applies to housing benefit. Why do we give housing benefit to people who earn £10,000 or £12,000,

and even as much as £17,000 a year? Why do we over-index benefits? We over-index special security benefits, for instance. That means that a person dependent on social security receives a 4·7 or 5 per cent. tax-free increase. To keep up, the low-paid must receive an increase in pay of at least 7·5 per cent. It should be no surprise to the Government that wages are going up by 7·5 per cent. That is what is necessary, taking taxation into acount, to keep up with the basic income fixed by index-linked supplementary benefit.
Another sacred cow is local government. I do not know how my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) has the nerve to criticise the Government when he did so much to cause today's problems by his reform of local government.
Today, 1 million more people are employed in local government than in 1960. That costs at least £12·5 billion a year. The Government are responsible for all expenditure, including that on local government. Some of the nonsense talked about the autonomy of local government does not bear examination.
A moratorium should be imposed upon local government recruitment until local government employment comes more into line with employment in the rest of the community where labour has to be shed to make undertakings more efficient and viable. Why should local government have to shed only 4 per cent. when the Civil Service has managed to shed 14 per cent. of its labour force?
I welcome the reform which is to come in a Green Paper on taxation. I also look forward to the promised reforms in welfare benefit reviews. I urge the Government not to do anything in isolation. All these matters should be brought together. We should have one reform; we should have one taxation benefit system; we should change the position at the earliest possible moment—there is no need to wait for a computer or for two or three years—and preferably in the next Budget, in which no one pays tax and receives benefit. It is an absurd and bureaucratic waste. The only people who gain from the present system are the bureaucrats.
Although we claim that we have tried to do something to help unemployment, unless we take a radical stance we shall not succeed. The expenditure on the youth training scheme, job creation and so on has risen from £180 million in 1974 to more than £2,000 million today. That is achieving nothing very much, but is adding to the burden of taxation. The time has come for a radical reform of our unemployment system. If we had put the Beveridge report into operation, the unemployment problem would never have confronted us.
The Government must be more firm with young people. Why do we insist on giving them the choice of either receiving benefit and doing nothing or accepting training? They must accept training. Beveridge said that no young person should leave school and immediately join the dole queue. He said that they should have training and acquire a skill. I urge the Government to be more bold in that area.
Sooner or later we will have to put a stop to this something-for-nothing society. Why cannot we turn the jobcentres into work centres? Why cannot we offer £1·75 or £2 an hour to all those out of work to do some environmental work? If people do not want to work, that is up to them. We could give all who want to work a job for less than £12 billion per year, while we are currently


spending in excess of £15 billion in supporting unemployment, in regional aid and in the other measures to alleviate unemployment.

Mr. Stan Thorne: I assure the hon. Member for Norfolk, North (Mr. Howell) that I have never met anyone who expects something for nothing from this Government. On the contrary, they have ceased to expect anything.
Conservative Members have shown mixed interpretations of the Budget. It was supposed to have been about the creation of jobs, but it is obvious that Conservative Members are highly sceptical whether it will achieve that aim. It could be argued that those on the Treasury Bench have said on previous occasions that they could do nothing about unemployment and that they cannot create competitiveness in industry. Yet earlier this afternoon the Secretary of State for Trade and Industry catalogued a whole series of measures that he claimed would improve the competition in the market place by investment in small businesses and so on. The notion that the Government cannot do anything about unemployment while at the same time trying to persuade people that they are doing something only creates absolute confusion about the Government's policies. The Government certainly do not provide a service to the people. They do not meet people's needs—they have made it clear that that is not the job of Government.
The hon. Member for Norfolk, North said that he was opposed to child benefit for certain sections of the community. I believe that child benefit is wholly inadequate for the millions of people who are in desperate circumstances because of the lack of employment. Indeed, it is in the meeting of people's needs that jobs can be created. Conservative Members talk about growing prosperity, but it is apparent that they are talking about the manufacture of consumer goods and selling more of them. They do not see the meeting of people's needs in terms of prosperity. Planning our resources to meet the needs of people will, to a large extent, solve the problem of unemployment while filling those tremendous gaps throughout the country, especially in the urban areas.
How do we plan our capital, our land, our equipment, our factories? Do we plan them on the basis that they will produce for use or produce for profit? It is clear that in our society we plan them somewhat inefficiently on the basis of profit. The one resource that we waste, and have done for many years, is the human resource. They are wasted because we are unable to grasp the need to produce for use. We could have a shorter working week of, say, three or four days. There is little prospect of that now, but it must come at some time if we are to avoid having 5 million or 6 million unemployed in the early 1990s.
I, like other hon. Members, am concerned about my area. In the Preston travel-to-work area, 19,000 people are unemployed—12·4 per cent. of the potential working population. The position in Lancashire as a whole is deteriorating and there is an inflow of population to the new town. The current unemployment figure is 21,467 for those out of work for more than six months; for more than 12 months it is 40,280 and for more than two years it is a miserable 7,534. That is an area where industrial growth is a real prospect. Lancashire Enterprise Ltd. is attempting

to create jobs by attracting enterprises to Lancashire. It is not aided by the Government's economic policies or their attitude to local authority spending.
Local authorities are starved of the funds that they need to undertake the investment that we need. In Preston and other parts of Lancashire we have an appalling housing situation. We still have young families living in multi-storey blocks of flats. There is an enormous backlog of repairs to council property. We need to spend several million pounds over four or five years to overcome that problem and to deal with the housing shortage. Undertaking that work would have an enormous impact on jobs, and there would be a multiplier effect in terms of companies in other than building which produce for the construction industry.
The North-West regional health authority has announced that it is running down hospital places for people with mental handicaps. It hopes to send those people out into the community. I hope that the authority is making it clear to the Government that people who go into the community from that type of care need to be catered for. Accordingly, more jobs and services must be provided to meet that need.
We still hear too many reports of people waiting three or four years to undergo minor operations, yet doctors are waiting for hospital positions. There are shortages of kidney machines and other types of equipment. Meeting those needs would help to reduce the numbers of those unemployed. Reductions are being made, we are told, in the overall cost of the drugs bill. Recently on television there was a programme about tranquillisers. One that concerns me is Ativan, because it meets an initial need but then becomes addictive.
What has happened to the Trethowan report? That has not been discussed in the House, although it dealt, among to other things, with the employment of clinical psychologists and the number of psychologists needed in the Health Service.

Mrs. Kellett-Bowman: rose—

Mr. Thorne: I shall not give way to the hon. Lady because my time is up and I am anxious to enable other hon. Members to take part in the debate.

Mr. Spencer Batiste: It is a tragedy that the Chancellor's freedom of action was drastically curtailed by the wasteful and unnecessary political strike in the mining industry, but the cost to the country of not standing firm would have been very great. In those circumstances, and given that constraint, the Chancellor has put forward a package of measures that is well designed in the long term to encourage enterprise and jobs.
I welcome the encouragement that the Chancellor has given to research and development, to the reform and integration of the income tax and benefits system and to the community programme. As time is short, however, I shall concentrate on the measures that have been designed to remove obstacles to jobs in the small business sector because in my view most new jobs will come from that sector.
When one talks to small business men of their problems, the subject that always comes first and foremost is VAT. Many people in the shoe and clothing trades, in newspapers, in the retailing of books and those who


manage pension funds will be wondering whether the large sums of money that they spent on parliamentary consultants, lobbyists and postage were justified. For them, if not for the professional lobbyists, the assurances of the Chancellor will be a welcome respite. I hope, however, that the assurances he has given not to extend the VAT base do not mean that he is no longer thinking about further reform of the VAT system.
My right hon. Friend announced in the Budget useful and welcome changes in VAT procedures on temporary imports and on bad debts, and those will be helpful to small businesses. However, the one action that he could take which would help them most of all, as my hon. Friend the Member for Bournemouth, East (Mr. Atkinson) pointed out, would be to increase massively the threshold for VAT.
The Chancellor said that he was fighting his corner vigorously in the EEC on zero rating. I hope that he is fighting vigorously also for a £50,000 threshold. It would not be an expensive operation to change the system. But should he need extra revenue, it could come from the introduction of a new luxury rate of VAT. Indeed, if we are to continue to switch from direct to indirect taxation, the VAT system must be more flexible and we must look again at the number of rates that exist.
Another major inhibition on employment in small businesses is the employment protection legislation. For many people it means the difference between having a job which is not quite so secure and having no job at all. In this important area, the judgments that were made at the time of the 1971 Act were sound. Therefore I support the reintroduction of the two-year qualification period which now brings the unfair dismissal and redundancy qualifications into line with each other. They should never have parted company.
One action of even more significance in this connection must be the removal of small businesses from the employment protection net. It was the original judgment of the 1971 Act that companies employing fewer than four people should not be subject to the employment protection legislation.
That follows naturally, because these are companies in which personal relationships between the few people who work in them are especially important. In those companies there is often limited management expertise or experience. A large award of damages to someone who has been unfairly dismissed can result in the redundancy of his colleagues and the complete collapse of the business.
Another area which affects small businesses is that of wages councils. I have long advocated the deratification of the ILO convention. We should consider this whole subject in the context of our national needs. I was delighted, therefore, with the announcement of the Secretary of State for Employment last Thursday.
Circumstances have changed substantially since wages councils were introduced at the beginning of the century. In future, wages councils and their continuation must be judged on the effectiveness with which they perform their functions and whether they operate beneficially for the industries which they serve. Their history for the best part of the century has, at best, been chequered. Wages councils have undoubtedly contributed to pricing young people out of work by eroding differentials and denying training to them.
Wages councils have undoubtedly inhibited recruitment by small businesses as a result of their complexity and rigidity. There is a widespread feeling that wages councils and those who serve on them are too academic and out of touch with the realities of industrial life.
It is clear that the status quo is unacceptable. There are a number of alternatives for reform—not just abolition—and there is no need for a uniform response to each industry. Our response can and should be different to meet the particular needs of individual industries.
For example, I am anxious that Sunday trading should be introduced, and I am mindful of the comments of the Auld committee that looked into the matter. We must look at each industry in the context of its own circumstances. Above all, however, it must be appreciated that the status quo is unacceptable. If we are to continue with wages councils, they must address the problems that I have described.
The intention substantially to extend the youth training scheme was one of the most welcome announcements in the Budget. It is impressive to note the way in which the scheme can pick up people who have been drop-outs at school, who have been demotivated by the education system, but who can be remotivated and given fresh interest by worthwhile and relevant training. The new scheme will require a great deal of increased employer participation financially and in extending the number of places that are available. In considering the future of the scheme, most employers will be looking for enthusiasm rather than compulsion in those whom they recruit. I probably reflect the views of many hon. Members on both sides of the House when I say that the scheme must succeed.
But there is one concern. We have compulsory education up to the age of 16 years. Why should it be wrong, if we have compulsory education up to that age, to extend the system for the next two years? If a person has the option at the ages of 16 and 17 to go into employment, further education or youth training, is it right, sensible, or even moral, that we should present him with the fourth option of unemployment? This is a serious matter which we shall have to address when the new scheme is in place. The new scheme, as extended, must be one that enjoys the widest possible support in the House and the country. That is an essential ingredient for its success.
I support the Budget because the measures that it proposes are necessary steps in the way forward. They will take us in the right direction in creating an enterprise culture. It is only within such a culture that the additional jobs that we need will be created. By the time that my right hon. Friend the Chancellor of the Exchequer comes to make his decisions next year, I hope that he will have much more room for manoeuvre. I have tried to signpost the directions that I hope he will be taking, especially for small businesses. It is clear that there are too many avoidable obstacles to employment and enterprise, and they must be removed.

Mr. Gordon Brown: The hon. Member for Elmet (Mr. Batiste), in speaking in support of the Budget, forgot—this is something that Ministers have been careful to omit from their remarks—to say


that no previous Chancellor of the Exchequer in contemplating a Budget this century has had the financial advantages that are available to the present incumbent.
Oil revenues amounted to £12 billion last year and there will be £13·5 billion in the year to come. There was a windfall bonus of £2 billion last year merely because of the decline in value of the pound and there will be a windfall bonus of £3·5 billion in the year to come. However, in a Budget that the Chancellor describes as a budget for jobs, a Budget that he says will deal with the scourge and evil of unemployment, the best that he can contribute directly in this year to his declared priority, the creation of jobs, from the windfall of North sea oil revenues of £4 billion is £0·075 billion. That is 2p for every pound of the windfall from revenues that he has received.
There will be nothing extra this year for the youth training scheme. There will be nothing extra to improve our infrastructure. Only £75 million is to be spent on the community programme and only half of that sum is to be spent by Christmas of this year. There is £75 million for the right hon. Gentleman's priority, the unemployed, but there is more than £200 million for the handlful of hard-pressed millionaires, who are to be relieved of the burden of capital gains tax and capital transfer tax. There will be £50 million for the land speculators, who are to be relieved of the burden of development land tax.
There is £75 million for the right hon. Gentleman's priority, the unemployed, but the lion's share of his £800 million in tax concessions will be for those rich enough not even to worry about work. The £75 million is not even new money. It is merely a restoration of a cut in the budget of the Department of Employment of £70 million, which was imposed in the autumn statement last November. That is the measure of the Government's concern for the unemployed.
Officially, there are 1·3 million who have not worked for a year or more but the real figure, by any objective standard, is nearly 2 million. Even the CBI argues that thousands could be returned to work by spending £1 billion on an infrastructure programme. The National Economic Development Council asserts that, without such measures, and even more extensive ones, there can be no solid improvement in unemployment for the rest of the decade.
Against this background, the best that the Chancellor can do for his priority, the unemployed, this year is to provide the cheapest possible places on the community programme for 100,000—not by the summer of this year but by the summer of next year. These will be temporary placements, at a cost of only £63 a week. This means that 90 per cent. of the unemployed will be left with absolutely nothing. Yet this is the Budget for jobs. At its best, it will create in my constituency, and in the constituencies of every Member of this place, only 150 new community jobs by the summer of 1986.
The Chancellor referred in his Budget statement to the tragedy of youth unemployment. Only one in three of this summer's school leavers will find work and there will be fewer jobs and fewer college places for young people in 1988 than there are now. The Chancellor is offering nothing extra to the youth training scheme this year. The recurring element in the tragedy of youth unemployment is the feebleness of the Chancellor's attempts to do anything to relieve it.
Last year, the right hon. Gentleman set aside £1 billion for a one-year youth training scheme. He tells us now that the £1 billion will have to suffice for a two-year training

scheme that is to be provided on the cheap. The real proposal, which has been carefully omitted in the Budget—the Chancellor is ashamed to tell us what he already knows—is to take away benefit from young people. It is not proposed to give them jobs.
I expect the Chancellor to answer this accusation directly. The Chancellor and his ministerial colleagues have decided — the decision was reaffirmed by the Cabinet committee only last Wednesday — that the Department of Health and Social Security should abandon all financial responsibility for 16 and 17-year-olds, no matter what their circumstances are.
The Conservative party makes a fetish of individual liberties but is prepared to debar teenagers by law from the right even to claim benefit. The established responsibilities to 16 and 17-year-olds are about to be abolished by means of the social security reviews, with incalculable consequences for nearly 200,000 families, who will lose £17 a week. A new and chilling wind of poverty will sweep through thousands of families which are already poor. The measure is defended by the Government as part of their strategy to create prosperity.
What is the Chancellor's long-term solution to the problem of unemployment? His first measure to create jobs — this was mentioned by the hon. Member for Elmet—was to make it easier for employers to destroy them by the amendment of the unfair dismissal provisions, even after a private report commissioned by the Department of Employment stated that not one job would be created as a result of the proposed change.
How does the Chancellor propose to create the real jobs that he talks about? How will he reverse the cuts which have left British industrial investment £3 billion less than it was three years ago? We do not match the spending of our competitors on research and development, which has fallen over the past six years. We do not improve our infrastructure or re-equip industry. We do not take the extraordinary measures that are needed to deal with the extraordinary problem of a manufactured trade deficit which is projected at £4·5 billion in the year to come. We do not stimulate investment in information technology, which is in deficit by £2 billion officially, or in electronics which has a £3 billion deficit. It is projected that that deficit will be £8 billion by 1993.
We do not even invest in the petrochemical industry, which was the subject of a recent Neddy report. That report shows that we, alone of all oil producers, have lost capacity in the petrochemical industry in recent years. We do not modernise our adult training. Half as many British workers have recognised qualifications as their counterparts in America, Germany and Japan.
Having denied ourselves, on the narrowest of ideological grounds, all positive, rational and empirically validated measures to improve the economy, the Chancellor now seeks to diminish unemployment by increasing poverty, whether one is in work or out of it. The right hon. Gentleman's solution to unemployment is quite simply poverty. If he has his way and the Secretary of State for Trade and Industry has his, they will abandon any protection for the low paid by destroying the wages councils. They were created in 1909 as a result of public agitation. They were born of moral indignation at poverty.
We are to have nine weeks' consultation to destroy a 76-year-old system. That is nine weeks' consultation on the basis of a White Paper that is silent about the immorality and indignity of low pay. It is nine weeks'


consultation to remove a law that was the handiwork of Sir Winston Churchill, who recognised that poverty was not simply degrading but inefficient, who told the House that low pay was a national evil leading to progressive industrial degeneration, and who understood that, when the state intervened to create a national minimum wage, it was not violating the rights of employers but was righting the wrongs inflicted against employees.
Now that the spirit of Sir Winston Churchill joins the clerics and the teachers and the other trade unionists as part of the enemy within, now that his views are the unacceptable face of modern Conservatism, we are up against not the one nation Toryism, represented in an elequent way in this debate, nor even the Toryism of the aristocracy or the grouse moors—the old Tories at least had the excuse that, for them, Toryism was a sort of hereditary disease — but the new Tory party which dogmatically worships free enterprise, whether it is enterprise or not, and which would rather that people starved, shivered and froze in the pursuit of free market forces than that they were assisted by state intervention.
Is it not the case that all the evidence available to us during the past six years, when the incidence of low pay and poverty have grown, is that no amount of unemployment, low pay or poverty pay will create the economic recovery about which the Chancellor talks? This is the Chancellor who set out not to create thousands of jobs but to save his own, whose Budget leaves not only a divided nation but a divided party and who says that he cannot afford the poor and the unemployed. The truth is that the nation cannot afford the price that it has paid for this Chancellor.

Mr. Tim Eggar: Sometimes last Tuesday one could almost feel the frustration of my right hon. Friend the Chancellor coming through his excellent presentation of the Budget as he tried to steer the course between reassuring the financial markets and adjusting to political pressures. Within those two constraints, my right hon. Friend was just as imaginative this year as last year.
Were those constraints self-imposed? On the revenue side, they were not in any sense self-imposed. I am sure that my right hon. Friend, when he set out at the beginning of the year thinking about what he would do in his Budget, did not want to exclude the options for the extension of VAT or to be prevented by political pressures from tackling pensions. If we are honest, we would say that political pressures from Conservative Members acted as a constraint on the revenue side. I regret the fact that during this Parliament we shall not take any further steps towards fiscal neutrality, but I recognise reality.
Was the constraint of the PSBR self-imposed? Every year since 1980 I have argued that the Chancellor could have lived with a higher PSBR than he accepted. This year was different. The markets were extremely nervous. If we had gone for a higher PSBR and there was some relaxation on the expenditure side, there would have been an overreaction. We might have found ourselves in a greater exchange crisis, with interest rates rising sharply. A higher PSBR than that chosen by the Chancellor was never a serious option. It is not fair to say that the constraints under which my right hon. Friend was operating were self-imposed.
My right hon. Friend the Chancellor rightly stressed the importance of supply side measures. I hope that the new measures that he has announced will be added to during the coming weeks. For instance, the abolition of development land tax was welcome. It should produce more land for housing and industrial development, especially in the cities and suburbs. If we really want to tackle labour mobility, we should encourage the private rented sector and scrap rent controls for future tenancies. If we really want to free land, we should give the private sector the right to go to public sector entities, which own the land that the private sector wants to buy, and serve notices on them to put that land up for public auction, because there is still too much public sector hoarding of land.
I have serious reservations about one supply side measure mentioned by my right hon. Friend. He called for the abolition of wages councils. That was radical stuff. During his speech, I reflected on the fact that that move contrasted sharply with his cautious attitude to tax reforms that affect the more articulate. I accept that wages councils probably adversely affect young people's employment and that they may be unnecessary in certain industries and intervene too much across the board of conditions of employment. That adds up to a case for radical reform of the wages councils, and not for their outright abolition. There is still a role for the Government in protecting the vulnerable in society.
The Budget not only sets an economic framework for next year but will have a dramatic influence on the political climate between now and the next general election. The options are closely circumscribed by the figures in the Red Book. On the revenue side, we have all noted how the fiscal adjustment, or room for tax cuts, disappeared this year. I am not too optimistic that the £6·5 billion that is left to the Chancellor over the next two financial years will not disappear as well. It would be dangerous politically for us if we held out much hope of tax cuts during the remainder of the Parliament.
The outlook on the expenditure side is not much more encouraging. Last year's expenditure round was especially fierce and the political fallout was not helpful to the Government. Next year's round will not be much easier. The £2 billion addition to the contingency reserve is a recognition of how difficult the round will be and of the fact that the political support for further public expenditure restraint is slowly ebbing away.
The Chief Secretary will be fortunate if he can protect the fiscal adjustment from departmental raids. It needs to be protected not only because it would be nice to have the option of reducing taxes but because we shall want to introduce other measures for employment creation and shall need the room created by the fiscal adjustment.
The message is clear: radical reforming instincts for this Government can be allowed their play only when they cost little money and command general support. That is true in two respects—denationalisation and supply side employment measures.
What does that mean for economic management during the next couple of years? We should aspire to nothing more dramatic than careful, prudent and well-managed stewardship of our finances. Our preoccupation should be the provision of a stable economic environment, with the aim of doing everything we can at the margin to assist with employment.
The Chancellor and his team are now cast as pragmatic managers, not as radical innovators. That is not necessarily a criticism of them, nor should they be ashamed of that role. After all, pragmatism is a major strand of the Conservative tradition. The Chancellor may find this an unexciting prospect, but to offer the electorate stability, low inflation, consistent economic growth and measures aimed at increasing employment is not a bad record. It is not a bad manifesto. It is one that I, for one, would willingly settle for.

Mr. William O'Brien: I sat through the Budget presentation by the Chancellor of the Exchequer, and at no time did I witness any sincerity that it was a Budget to create jobs and reduce unemployment. Furthermore, listening to some of the speeches by Conservative Members, I still feel that we are witnessing a charade of an oath to reduce unemployment, and provide jobs and job opportunities. Indeed, tonight we have heard Conservative Members say that the Budget does not reflect any enthusiasm to create jobs and reduce unemployment. That feeling is prevalent throughout the country.
This afternoon we heard the Secretary of State for Trade and Industry present his case as to why the Government should pursue their strategy in this Budget to reduce unemployment. The right hon. Gentleman referred to the recovery of the economy. I invite him and any other Minister to come to Yorkshire and the north of England and explain where the recovery is taking place. In that area unemployment is rising and there is a decline in job opportunities. No recovery is imminent. The right hon. Member for Old Bexley and Sidcup (Mr. Heath) said that more energy should be put into helping the regions and that there should be more regional grants to help industry in the areas of high unemployment. The Chancellor should consider the loss of jobs in the areas where there has been a rundown of the textile, engineering and foundry industries. Such industries in Yorkshire, as well as throughout the north of England, have collapsed.
Reference has been made more than once in the debate to the miners' strike and to the fact that it had an effect on the Budget and the wherewithal to provide more resources. I remind the Chancellor and other Ministers that the Government had been prepared to take the miners on. When they took them on they did not realise that it would be so long and hard a battle. The Secretary of State for Trade and Industry referred to winning the battle. The Government may have won this first stage, but the argument is not over. There is still the question of what will happen to the communities after pit closures. In my constituency, where several pits have been closed and unemployment has increased, what are the Government doing about it? There must be some recognition of the fact that further hardship and greater problems will be caused when the mining communities are left without additional employment when colleries close.
The Secretary of State also said that people must accept that there is a recovery. He is a political ostrich. He has his head buried in the political sand if he thinks that there is a recovery of the nature that he outlined. We need regional aid. The Chancellor must give regional aid to areas where there has been a rundown of industry, especially in the north of England.
There must be capital spending on infrastructure if we are to prepare for further industrial development. I know

from my experience in local government that, when industrialists were contemplating a development, they were concerned about road communications. If the Government do not develop and maintain roads, industry will not develop. Industrialists are also concerned about street lighting when they contemplate development.
There is also public transport. The Government are abolishing it in many areas. If we do not get assistance from the Government in maintaining and developing public transport, there will be a further reduction in industrial development. The same applies to sewerage and sewage treatment. We need that capital expenditure if there are to be real development and job opportunities in the regions.
There is also housing. Industrialists in many areas ask, "Can you provide houses for employees?" The Government are not allowing local authorities the capital to develop housing in the regions. I appeal to the Chancellor to take that matter on board, because it is important to the north of England and particularly to Yorkshire.
Hon. Members have referred to the revenues and windfalls to which the Chancellor and the Government have had access in the form of North sea oil revenues. Those revenues should be spent on developing job opportunities, not on maintaining rising unemployment. We have been advised that employment will deteriorate, not improve, over the next 12 months. We have heard that serenade for the past six years.
Rising interest rates are creating problems for industry and for people with mortgages. The tax concessions that the Chancellor outlined in his Budget statement were swept away within 24 hours by the announcement by building societies that interest rates were to increase. Extra taxes on water, gas and electricity are being levied, so there is no concession in the Budget to anyone, whether employed or unemployed, unless they are in the very high income bracket.
The Secretary of State for Trade and Industry mentioned wage claims. The extra taxes that I have outlined will help increase wages beyond the norm that the Government are setting, because trade unions will demand larger increases. We have heard much about the extra support for small industries. I do not know where Conservative Members find that support, as I see none in my constituency. Small industries there are at a loss to understand what the Government are doing to help them, although many promises have been made.
We have also heard about assistance to charities in the form of equipment and services. Charities want some help when they are assisting people on low incomes, and the Chancellor should consider the VAT that is charged on their collections. I hope that they will be assisted.

9 pm

Mr. Terry Davis: During this debate, we have heard several powerful speeches from a succession of right hon. and hon. Members who have called for a change in the Government's policy. It could have been said that it was predictable that my right hon. Friends the Members for Lewisham, Deptford (Mr. Silkin), for Ashton-under-Lyne (Mr. Sheldon) and for Glasgow, Govan (Mr. Millan) and my other hon. Friends would call for a change in the Government's policy, but we had a similar call from the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). Perhaps even more


impressive was the fact that we heard strong calls for changes in policy from right hon. Members on Conservative Benches. The right hon. Members for Old Bexley and Sidcup (Mr. Heath), for Waveney (Mr. Prior) and for Taunton (Sir E. du Cann) were critical of both the Budget and the Government's economic strategy.
As the right hon. Member for Hillhead said, there was a great deal of common ground among them. However, I must tell him that his call for united action in opposition to the Government's policy—a sort of new popular front—would be better received by the Labour party if it came from a different quarter. In particular, it would have been better received if it had not come from someone who was personally responsible for much of the disunity in opposition to the Conservative Government at the last general election and therefore directly responsible for the overwhelming majority enjoyed by the Government, which enables them to regard double digit unemployment with equanimity and which they interpret as an endorsement of the very policies that have produced that level of unemployment.
I suspect that the speech which will be most widely reported tomorrow was that of the right hon. Member for Old Bexley and Sidcup. He delivered a devastating indictment of the Government's economic policy. He convinced me that he cares deeply—[Laughter.] I am sorry that the Chancellor chooses to laugh. I have major political differences with the right hon. Member for Old Bexley and Sidcup. Indeed, I originally came to this House after campaigning in an election almost personally against him. Nevertheless, in spite of our differences, the right hon. Gentleman convinced me that he cares deeply and sincerely about unemployment. The right hon. Member for Old Bexley and Sidcup also demonstrated to us all the extent of the disagreement—the fairly wide spectrum, as I think the right hon. Member for Waveney described it—in the Conservative party.
The real significance of the speeches of the right hon. Member for Old Bexley and Sidcup and his right hon. Friends could be found in the fact that they are not supported by many of their hon. Friends. Indeed, they have received rather more cheers from this side of the House. The importance of their speeches lies in the fact that they are virtually isolated within their own party. A change in economic policy can come only from the Labour party.
As my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) has made clear on several occasions, the Labour party judges the Budget on two tests: what it does to alleviate poverty, and what it does to reduce unemployment and both provide and encourage the provision of more jobs.
We welcome the increase in personal tax allowances to the extent that it benefits the low paid, and we also welcome the reduction in national insurance contributions paid by some people on low wages. On the other hand, the Chancellor tends to talk, especially on television, as if he had at one swoop abolished poverty. He has done no such thing.
According to the Low Pay Unit, the number of families in the poverty trap has increased threefold since the Government came to office. In 1979, there were 90,000 families — a shameful figure — in 1984, there were

270,000. The Budget will take between 5,000 and 10,000 families out of the poverty trap—fewer than one in 27 families.
The Chancellor of the Exchequer also seems to forget that people who are liable to pay national insurance contributions are required to pay them on the whole of their income. The Budget means that a person who receives wages of £37 a week will still have take-home pay which is less than that of a person who receives £35·49 a week. Previously, we had the poverty trap at one threshold for national insurance contributions. The Chancellor has introduced three rates and, therefore, created three traps.
Indeed, the introduction of four separate rates for employers has increased the number of poverty traps from one to four. My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) mentioned a young man whose wages had been held to £33·99 a week to avoid the payment of national insurance by him and his employer. In future, wages will be held to £35·49, £54·99, £·89·99 and £129·99. The Chancellor of the Exchequer should have raised the threshold, but instead he has replaced one threshold with four, which will result in the wages of the low paid being held down.
The Chancellor also fails the test of fairness in the distribution of his bounty. Indeed, we would not expect him to pass it. The Chancellor has wholly failed to concentrate the benefit of his changes in income tax and national insurance contribution on the low paid. Again according to the Low Pay Unit, most low-paid people will continue to pay proportionately more tax than in 1979, and an average family on average earnings will pay proportionately more tax than before the Government came to office. Only those earning or receiving more than £18,000 a year have been given a significant reduction in the amount that they pay in tax.
This part of the Budget can be summarised in two figures. As a result of the Budget changes in income tax and national insurance contributions, families on average earnings—£170 a week—or less will find their weekly income increased by £1·73, whereas a Cabinet Minister on £827 a week will be better off by nearly £9 a week.
If the Chancellor was serious about helping people afflicted by poverty, he would not only have announced changes in income tax and national insurance contributions but increased social security benefits which directly affect people on the lowest incomes.
He would have begun by announcing an increase in child benefit. One of the most dishonourable parts of the Government's record is their deliberate and repeated refusal to honour the pledge that they gave when in opposition to increase child benefit in line with increases in tax allowances. Of course, the Chancellor will say that it is not for him to do so. He will tell us, as he did last year, to wait for an announcement from the Secretary of State for Social Services. But we all know that the Chancellor's silence is more eloquent than words. If the Government intended to increase child benefit in real terms, the Chancellor would not leave it to his right hon. Friend to announce it. It is precisely because any increase in child benefit is a flat rate increase, and because the same amount is given to the mother of every child, that it gives most help to the families who need it most. That is why the Chancellor will not increase child benefit.
We should also consider those who pay no income tax. There will be no real increase for pensioners. We actually heard this evening from the hon. Member for Norfolk,


North (Mr. Howell) that pensioners and those who receive social security benefits had been over-indexed. He complained that the increases were too large. In our view, the Chancellor should have announced a real increase in pensions so that pensioners can share in any improvement in the standard of living.
Another group of people who have lost out are those who have been unemployed for a long time—those who are on short-term supplementary benefit on long-term unemployment. They are too old to go on a youth training scheme, and they will get nothing from this Chancellor who only pretends to alleviate poverty.
I repeat that we welcome the higher tax allowances for people with low incomes and the lower national insurance contributions for the low paid. We criticise the Chancellor for having ignored so many others.
We can judge the depth of the Chancellor's concern about poverty by the fact that he is providing only £270 million for the reduction in national insurance contributions from employees. As my hon. Friend the Member for Dunfermline, East (Mr. Brown) said, that compares with the Chancellor's ability to find £50 million to abolish development land tax and to find £155 million to reduce the amount paid in capital gains tax by only 15,000 taxpayers. It also contrasts with tax cuts during the past six years, amounting to £3 billion, for the top 5 per cent. of recipients of income. That sum is apart from the other small gifts that the Chancellor has made, such as the money he gave in last year's Budget to those who own stud farms, the money he gave to those who own woodlands, and the money he gave to parents who send their children to private schools.
The money is there for a genuine attack on poverty. The money is there all right. If the Government wished, they could get the money. What they have not got is the will.
The story is similar with regard to jobs. The Budget does little—almost nothing—for jobs during the coming year. The centrepiece of the Chancellor's claim to have provided a Budget for jobs is the expansion of the youth training scheme and the community programme. Both measures were welcomed by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), but the youth training scheme will be extended to two years from April next year, and the community programme will be increased to provide another 100,000 places by June next year. How many jobs will be provided this year? I suspect the answer is very few.
Who will pay for the scheme? The Chancellor has made it clear that most of the cost of the youth training scheme will be borne by employers. I remember a time when the Chancellor told us that increases in employers' costs were antipathetic to increased employment. A document was published by the Treasury a few weeks ago about the relationship between wages and employment, urging pay restraint because employers would then be able to spend more money and create employment. The burden of that document is not that employers would create more employment by paying more money to the Chancellor.
Perhaps the most shabby part of this Budget is the attack on the wages councils, which has been deplored even by many Conservative Members who otherwise support the Chancellor. We do not know yet whether there will be abolition or emasculation of the wages councils, but we know that the Government will encourage employers to provide new jobs at low wages by abolishing or reforming — certainly by attacking — the wages councils. The

effect will be to increase poverty by encouraging low wages for people already employed at very low wages. They will now receive lower wages if the wages councils disappear, and there are 2·75 million people in that category. Bad employers will drive out good employers and wages will undercut.
Who are the 2·75 million people who are protected by the wages councils? Some of them work in the clothing factories, which will once again become sweatshops, but the attack on the wages councils will not only affect people in the clothing and tailoring trade, but others such as shop assistants who are paid as adults £71 a week, people in catering, and people in hairdressing on only £65 a week for an adult worker. The Chancellor says that to attack the wages councils will provide more jobs. However, it is not employers who create such jobs but the market. I should have thought that the Chancellor who believes in market forces would recognise the truth of that argument. Effective demand has the most influence in this sector.
Reducing the wages of the people who work in the hairdressing trade will not increase the number of people who want their hair cut. Presumably, the Chancellor thinks that abolition or reform of the wages councils, leading to lower wages and lower prices, will mean that people will get their hair cut more frequently. I have heard of elasticity of demand, but this is ridiculous.
It was no coincidence that the reference in the Chancellor's Budget statement to wages councils was preceded by his announcement that the Secretary of State for Employment would be extending the rights of the employer to dismiss someone unfairly. That is what it is about, not about the right of the employer to dismiss someone fairly. The employer will be able to dismiss any employee, however unfair it may be, provided that that is done within the first two years of employment.
The hon. Member for Croydon, South (Sir W. Clark) says that he knows employers who are reluctant to take people on — he gave the game away — because they cannot get rid of them. It is important to emphasise that the employer is already protected against mistakes in recruitment. He can dismiss someone unfairly within one year of taking that person on. The Chancellor wants to enable him to dismiss someone up to two years after he has been taken on—dismiss someone unfairly. That move is connected with the attack on wages councils because employers will be able to dismiss people after nearly two years so they can employ someone else on a lower wage.
This Budget is not about attacking unemployment, poverty and low pay but about attacking the low paid.
It is not only people who are protected by wages councils who will be vulnerable to this attack, but everybody else as well.
We must also note that the employers' national insurance contribution has been reduced for low-paid employees but, as with the youth training scheme, almost the entire cost will be borne by employers as a group. In that respect, the Budget involves redistribution, but redistribution from some employers to other employers. A question must be asked: as the Chancellor used to describe the national insurance surcharge as a tax on jobs, why is this move not a tax on jobs? We must ask whether this measure will provide low-paid jobs at the expense of existing higher-paid jobs.
In fact, it may provide jobs at £35.49 a week for one year and 11 months.
As for the tax cuts, the Chancellor will not provide the same benefit for pensioners and parents. That is exactly what happened last year. In fact, the increase in allowances is proportionately the same as last year when the Chancellor also doubled the allowances, and during the past year unemployment has risen by 120,000.
The Chancellor described last year's Budget as a Budget for jobs. He has used the same description this year. Last year he also used the phrase "the scourge of unemployment," and he repeated that phrase during this year's Budget statement. It only goes to show that there is nothing new in this Budget, not even the language.
The Chancellor says that we should look not at unemployment but at employment. In his Budget statement he suggested that employment had risen by 500,000 during the last two years. On "Weekend World" he was more forthright and more definite. He said that the number of people in work had risen by 500,000 over the last two years. That was not a suggestion but a statement of plain fact by the Chancellor of the Exchequer. The Secretary of State for Trade and Industry repeated that claim today.
I understand that the Chancellor and the Secretary of State were referring to the February issue of the Employment Gazette. The Secretary of State told us that between March 1983 and September 1984 there had been an increase of 480,000 in the labour force. During the debate on public expenditure three weeks ago I drew attention to the adjustments made by the Government statisticians and explained that the employment figures had been increased by 76,000 each quarter from the middle of 1983. Therefore the Government's employment figures included no fewer than 450,000 assumed, imaginary jobs. In fact, although I was absolutely right about the statisticians adjusting their figures by 76,000 each quarter throughout last year, I under-estimated the Government's skill with figures, because the 480,000 new jobs — the latest claim in the February issue of the Employment Gazette — are based upon a new set of adjustments. We now have not only revised statistics but also revised adjustments, and they are revised upwards. For some quarters the Government have adjusted the figures not by 76,000 a quarter but by 114,000 assumed extra jobs. The total adjustment for the 18 months from March 1983 to September 1984 is not 450,000 new jobs, as I suggested in our previous debate, but 580,000 new, assumed, imaginary jobs.
That adjusted figure of 580,000 assumed new jobs includes an increase of 317,000 in the number of self-employed. I accept that some of the unemployed will have started up their own businesses and become self-employed, but this Government are asking us to believe that no fewer than 317,000 people have become self-employed during this period of 18 months. I do not believe it and I do not think that the British people will believe it.
The inescapable point about this Government's employment record is that however much they fiddle about with the figures, and whatever adjustments they make to the quarterly statistics, they cannot escape the fact that fewer people are employed today than were employed in June 1979. Even on their own adjusted figures there are 1·3 million fewer people in employment—employed by employers and in self-employment—than there were in 1979.
The Prime Minister is fond of blaming the increase in unemployment on the increase in the population. But not even the Prime Minister can find a statistician to make adjustments that are big enough to hide the truth. There are 1·3 million fewer people employed today than when she became Prime Minister.
What is the Budget doing about that? Virtually nothing. It does nothing to provide real jobs directly, as the Government can. Everyone knows that they can. It does nothing to increase public expenditure, particularly on capital investment. The hon. Member for Croydon, South complained about the impression being given that the Government are spending nothing on capital investment. The hon. Gentleman has missed the point. No one is pretending that the Government are spending nothing. Our case, which has been accepted and urged by others as well, is that the Government should and could spend more than they are spending on capital investment. The level of capital expenditure is simply inadequate compared with the need.
There is no shortage of work to be done. As the right hon. Member for Taunton told us, there is no shortage of hospitals which need to be rebuilt. As my hon. Friend the Member for Preston (Mr. Thorne) told us, there is no shortage of houses which need to be repaired, and there is no shortage of people needing somewhere to live.
There is also no shortage of people to do the work. On the Government's own admission 3·25 million people are looking for work — unemployed people who can not only improve their standard of living by receiving wages instead of supplementary benefit, but restore their self-respect and dignity and obtain the personal satisfaction that they have been taught to derive from going to work. Finally, there is no shortage of money. The right hon. Member for Taunton pointed out that there is no conflict between an increase in public expenditure and cutting taxes. The money is there for both.
I hope that the hon. Member for Croydon, South does not think that I am being unfair in referring specifically to him. I regard his speech as important, more important in political terms than that of the right hon. Members for Taunton and for Old Bexley and Sidcup, or even those of Treasury Ministers. After all, the hon. Member for Croydon, South is the elected chairman of the Conservative Back-Bench finance committee. Ministers are appointed, but the hon. Gentleman has been elected by a majority of Conservative Members. He is the real representative of the Conservative party today.
It follows that we should not be surprised that the Chancellor is so unwilling to bring in a real Budget for real jobs. But it does not follow automatically that the Chancellor should indulge in such hypocrisy, standing at the Dispatch Box and pretending that he regards unemployment as a scourge. He goes further and tells us that "unemployment is unacceptably high". But as my right hon. and learned Friend the Member for Monklands, East drew to the attention of the House, only threee months ago the same Chancellor told an American newspaper that Britain—or the Government, I am not too sure which—could get along adequately with double digit unemployment. When is a scourge not a scourge? It all depends on the Chancellor's audience.
If that is what the Chancellor is telling foreigners, it is not surprising that he has done so little for jobs in the Budget.
The Chancellor has admitted that his Budget is not exciting, and he is right. But the Chancellor, too, misses the point. We condemn his Budget not for lack of excitement, but for lack of commitment. This Budget pays lip service to the alleviation of poverty and is half-hearted in its attack on unemployment. Compared with the scale of poverty and unemployment in Britain, this Budget is completely inadequate and deserves to be rejected by the House of Commons.

The Chancellor of the Exchequer (Mr. Nigel Lawson): The hon. Member for Birmingham, Hodge Hill (Mr. Davis) always makes up in volume for what he lacks in cogency of argument. But at least he discussed the Budget, which is a great deal more than the right hon. and learned Member for Monklands, East (Mr. Smith) did. Indeed, the right hon. and learned Gentleman avoided discussing not only the Budget, but the alternative produced by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) about a fortnight ago. As the House will recall, that included as a central point restoring all the higher rates of tax which this Government have abolished over the past six years and adding, on top of that, by the abolition of the upper earnings limit for employees, a further 9 per cent. In other words, the 83 per cent. top rate on earned income under the last Labour Government was not good enough for him; it has to be 92 per cent. That is how he thinks that he will restore this country's economy to health.
The right hon. and learned Member for Monklands, East also seemed to think that North sea oil revenue should somehow not be counted as part of the economy. In that respect, he was properly rebuked by my right hon. Friend the Secretary of State for Trade and Industry. However, it is interesting to look at the figures that include and exclude North sea oil. During the six years of Labour Government, from 1973 to 1979, the total rate of growth for the economy was 8 per cent., which is almost exactly the same as from 1979 to 1985, in the forecasts that we published in the Red Book. But although the total figures are the same, if North sea oil is left out, the rate of growth from 1979 to 1985 falls to 5·5 per cent., whereas the rate of growth under the Labour Government between 1973 and 1979 falls to 3·5 per cent. In other words, North sea oil had a greater impact on the rate of growth during the Labour party's period in office than during ours.
The right hon. and learned Member for Monklands, East accused us of deliberately creating the present high levels of unemployment. That is offensive nonsense, and he knows it. He knows that unemployment has risen sharply during the past few years, not merely in this country but in France, Germany, Italy, Holland, Belgium and many other countries. Is he saying that we, or the Governments of those countries, are responsible for that? Of course not. He is talking nonsense, and offensive nonsense at that. I hope that he will withdraw what he has said.

Mr. John Smith: Did any representative of any other country say in the United States or anywhere else that the people of this country could dodge along with double digit unemployment? Now that the right hon. Gentleman has had a chance to think about it, does he deny that he said that we could politically and economically dodge along with double digit unemployment?

Mr. Lawson: I have already said that that speech was made not in America but in the United Kingdom. I said that unemployment was a matter of profound concern—of social and human concern. That is what I said. Of course, the right hon. and learned Gentleman's quotation was completely wrong. I said that unemployment had not prevented the economy from growing at a very satisfactory rate. That is what I said, and that is a fact. There is no point in the right hon. and learned Member for Monklands, East trying to wriggle out of things in that way.
Britain is the only country in the European Community, and the only country in the whole of Europe, in which employment in the past two years has grown by half a million. The Government are doing everything that a Government can do to defeat the scourge of unemploy-ment. That should be made perfectly clear.
During the debate, we also heard speeches from the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), who is in his place, and from my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath), who is not now in his place. There was very little difference between the two speeches, so perhaps that does not matter. Indeed, I think that it was the right hon. Member for Hillhead who pointed out that there was no gulf between them. When he went on to remark about the shallowness of the gulf between him and Labour Members, I watched the expression on the face of the right hon. Member for Plymouth, Devonport (Dr. Owen). I know that that comment caused him considerable agony. The argument — [Interruption.] The argument by the right hon. Member for Hillhead was that the PSBR should be increased to £10·5 billion, the same as this year, to boost demand through spending on infrastructure. He said that if that were done all would be well. That is a bit rich coming from someone who frequently boasted when he was Chancellor that he achieved a surplus on the Budget—a PSBR of less than zero. To call the Budget deflationary, as the right hon. Gentleman did, when the projected rate of growth is 3·5 per cent. in 1985 is to turn words on their head. The Budget is certainly not inflationary. It is anti-inflationary.

Mr. Roy Jenkins: The Chancellor apparently does not understand the difference between a negative PSBR with unemployment at under 600,000 and a larger PSBR with unemployment at 3·5 million. It is therefore difficult to engage in economic argument with him.
My point was not that £10·5 billion was perfect, but, as he says that the last year was so successful, why is it necessary now to reduce PSBR to £7 billion?

Mr. Lawson: Let me develop the argument. The £10·5 billion PSBR this year has not solved all our problems, so why does the right hon. Member think that it will solve them next year? The £10·5 billion PSBR has been accompanied by employment finance at a higher rate of interest than the right hon. Gentleman or anyone else would wish. That is why it is of first importance to keep the borrowing requirement down.
Other countries are pursuing the same policy. As the right hon. Gentleman acknowledged, other countries are trying to bring down borrowing and monetary growth and to remove the rigidities in the economy from the supply side. There is a gulf—[Interruption.] I see that my right hon. Friend the Member for Old Bexley and Sidcup has arrived. He had to change and he is now in his place. I should like to put that on the record.
There is a gulf between the right hon. Member for Hillhead and some of my right hon. and hon. Friends and reality. The gulf is between the reality of the policies pursued by responsible Governments throughout the Western world and the policies which they espouse—which are totally different. There is a gulf between their views and the response to the Budget by Mr. Roy Close of the British Institute of Management, who said:
Limited resources have been used wisely with some useful measures, particularly to produce a better qualified work force through the expansion of the YTS and through the encouragement of small business.
The director-general of the CBI, Sir Terence Beckett, said:
The Chancellor has got it right; interest rates should fall because he is keeping a grip on inflation and on borrowing. This budget ought to be good for growth and jobs.
The House will agree that that is what matters.
The House will also agree that a more thoughtful and constructive speech was made by my right hon. Friend the Member for Waveney (Mr. Prior). I am grateful to him for his endorsement of many of the measures in the Budget, notably the restructuring of the national insurance scheme, his recognition of the vital importance of the supply side and of the measures that we have taken on the trade union front, in which he played an important part in the early days.
My right hon. Friend mentioned with approval the youth training scheme changes, the community programme, the changes in the Employment Protection Act, and, with some qualifications, the proposal radically to reform the wages councils. I am grateful to him for endorsing a number of the measures in the Budget.
The Budget statement emphasises one of the two key aspects of the Government's economic policy — the overall macro-economic policy directed towards achieving growth of demand in money terms, which is consistent with lower inflation, and the micro-economic supply policy which is aimed, through a reduction of disincentives created by the tax system and a reduction of regulation and an increase in competition, to improve the supply performance of the economy. The expansion of the YTS will also bring about improved supply performance.
It is important to make clear the different roles of the two aspects of Government policy. There has been a great deal of confusion during the debate about the prospects for demand and the Government's ability to sustain it. Many right hon. and hon. Members have not yet realised—and this was clear in the speeches of my right hon. Friend the Member for Old Bexley and Sidcup and of the right hon. Member for Hillhead — that the Government cannot, other than in the very short term, directly increase the level of real demand in the economy. Reflation increases the growth of demand in money terms—in other words, in the cash of the day — and the Government, like individuals, spend cash. Lower interest rates boost cash spending and a lower exchange rate increases demand in cash terms. Of course demand can be useful in money terms, but that is not the matter of concern —it is an increase of demand in real terms. Given an adequate growth of money demand, which is what we have in the economy, the real question is to see how that extra spending divides between real demand and inflation and

improving the performance of the economy so that the largest proportion comes from real demand and the smallest proportion from inflation.
That was a mistake made by the previous Labour Government, which is why they now languish on the Opposition Benches. Demand grew rapidly in cash terms during their period of office—it increased by no less than 120 per cent. However, real demand increased by only 8 per cent. The increase in prices was well over 100 per cent. Incredibly, those who are espousing that same course today believe that if money demand had risen by another 50 per cent. to 170 per cent., the outcome for employment would have been more favourable. Would it have stopped unemployment doubling, as it did then? If so, why was that not the course? The Labour Prime Minister of the time knew that it would be disastrous, and he said so.
What was the limit of that benign process of demand expansion for which we have heard the siren call today? It has been suggested that demand expansion should be combined with an incomes policy, so that the problem of expansion of demand being dissipated by higher inflation would be removed. I do not need to remind the House that during most of the time that the Labour Government were expanding demand, an incomes policy was in force. The numbers that I have quoted are after, not before, the effect of the so-called incomes policy.
The Government are pursuing a responsible path for the growth of money demand. During the past few years it has grown by 8 per cent. a year. That is more than adequate for any reasonable increase in demand in the economy. It provides ample scope for both inflation and unemployment to fall. There might be an inadequate real demand, but the notion that the solution is an increase in money demand is a profound fallacy. Money demand is the only instrument on the demand side that the Government can manipulate.
That is why it is so important to deal with the problems on the supply side. One of the main problems that we have seen there has been the failure of pay and prices in the economy to adjust to the growth of money demand, leaving more room for output and employment to rise. The tragedy is that too much of this growth of demand has gone in higher living standards for those in work at the expense of those without jobs. I repeat my claim that there is no shortage of demand.
Action taken by the Government to maintain expenditure will be fruitless unless wages and prices are kept reasonably stable. This is of vital importance to any employment policy and must be clearly understood by all sections of the public. If we are to operate with success a policy for maintaining a high and stable level of employment, it will be essential that employers and workers should exercise moderation in wages matters".
Those words were used in the 1944 White Paper on employment policy, and they hold good today.

Mr. Ian Wrigglesworth: Is it not a fact that unit labour costs rose by 4 per cent. last year? What will the Government do if workers do not exercise the restraint for which the right hon. Gentleman has been appealing?

Mr. Lawson: If restraint is not exercised, the level of employment will be less than it would otherwise be and less than it should be, but there are measures in the Budget, to which I shall come, directed to helping on that front.
In my Budget speech I emphasised the undertaking that I gave to the National Economic Development Council, last month, that the medium term financial strategy is as firm a guarantee against inadequate money demand as it is against excessive money demand. I hope that Opposition Members fully understand the implications of those remarks and will now unreservedly endorse the benefits that will flow from wage moderation.
This year's PSBR turned out to be higher than was planned, but I believe that it was right to borrow to finance the costs of the coal dispute. Those effects were only temporary, and now it is important to get back to the path of the PSBR. [Interruption.] It was worth while to save the country from the damage that that dispute could have caused and to reduce the ambitions of the leaders of that strike.
The right hon. Member for, Sparkbrook argued that if we could spend £2·75 billion to resist Mr. Scargill, why should we not spend a similar amount to defeat unemployment. The plain fact is that one cannot create jobs simply by spending money. That was not why money was spent to resist the effects of the coal strike. Jobs cannot be created that way, and the right hon. Gentleman does a great disservice to the unemployed to pretend otherwise.
The right hon. Member for Sparkbrook must know that if unemployment could be solved simply by increasing Government spending, there would have been no unemployment when the Government under whom he served were in power or, indeed, under any Government in the world today.
The costs of the coal dispute are a once-and-for-all cost. They are temporary, and it was right to borrow to spread the cost over future years. The NUM leadership forced its members into a loss of £1 billion in wages in a vain attempt to overthrow the democratic process.
Now that that is behind us, the prospects for the economy are much better than they would have been—[Interruption.]—and it would have been the height of irresponsibility not to have incurred those costs, which were necessary to keep our people at work.
As for incurring a higher PSBR now, that could only mean, among other things, higher interest rates. There could be circumstances in which that would be to some extent appropriate, but certainly not now in the present state of the financial markets.
I come to the measure to which I alluded — the restructuring of national insurance contributions. This is a major change indeed—something that has never been done before. For people at the bottom of the earnings scale we have made a direct attack on what is for them an even greater burden than income tax. For their employers, national insurance contributions are a significant part of the costs of employment. Reducing contributions on both sides was the most direct measure that I could take to improve job prospects for the young and for the unskilled.
The impact of these changes is not to be underestimated. Indeed, it is very great. The total benefit of the national insurance contribution measures to the low-paid and to their employers combined is well over £1 billion. It will be about £1·15 billion in a full year. Of this, nearly £900 million will go to employers of those earning less than £130 a week. In other words, the cost of employing 8·5 million of the least well paid employees—about 40 per cent. of all employees—will be cut substantially by up to £3 a week per employee. That will

increase the take-home pay of nearly 3·5 million earning up to £90 a week by as much as £2·18 a week. Of those, 1·2 million are single aged 25 years or less. About 1 million families will benefit, including 300,000 with gross family earnings under £90 a week. About 1·75 million self-employed will be better off also as a result of the Budget changes in national insurance and tax treatment. They will benefit by £155 million in a full year. That is an expanding sector of the economy that will be increasingly important in the years ahead.
Combining changes in income tax, employees' national insurance contributions and employers' national insurance contributions will mean a cut of nearly 30 per cent. in the total payments of a married man on £80 a week. The same man on £50 a week will see his payments cut by almost half.
I had to find the money to finance those changes in a difficult situation. I recognise that the abolition of the upper earnings limit is not universally welcomed. However, it will not have an adverse impact on job prospects for the higher paid. Those people's skills are in great demand, and the increase is small in percentage terms. The changes have been made possible because we cleared the ground first by abolishing the national insurance surcharge, which was the Labour Government's tax on jobs. Of course Labour Members do not like that. It is no wonder that they do not. We are introducing measures that will improve job prospects and living standards. They will reduce pressure for wage inflation and help the low paid. It is no wonder that Labour Members do not like them.
Meanwhile, the British economy is doing well both absolutely and especially by comparison with our main European competitors. Despite the coal strike, growth last year was 2·5 per cent. above the average for the Common Market countries. The OECD forecasts show Britain next year at the top of the European growth league, whereas under the Labour Government we were right at the bottom. That is the extent of the turn-round that the Government have produced.
We have now had four years of uninterrupted growth, and this summer we shall enter our fifth. Output is now at its highest level ever and exports, too, are at a peak. That is not merely because of oil, because this extends outside the oil sector. Non-oil exports grew by 9 per cent. in 1984 to reach a new record level. Business investment rose by 13 per cent. last year. That, too, was an all-time high. Profitability —the engine of growth—was also substantially higher.
Of course, Labour Members do not like this, but it is the truth. The hon. Member for Sheffield, Attercliffe (Mr. Duffy) was conspicuous as the only Labour Member who was prepared to concede that there was a pronounced upswing in the economy. He gave full credit to it, and I give due credit to him.
The real rate of return on non-North sea oil companies is now about 7 per cent.—twice the level of four years ago. Of particular importance is the quality of this growth. It has been achieved with large improvements in productivity.
My right hon. Friend the Member for Old Bexley and Sidcup expressed considerable concern about the fact that we were becoming a low-productivity economy. I should like to reassure my right hon. Friend. During the three and three quarter years when he was Prime Minister, productivity on manufacturing grew by 3·1 per cent. a year


—not bad. During the most recent three and three quarter years for which we have statistics, productivity in manufacturing grew not by 3·1 per cent. a year, but by 6·2 per cent. a year. My right hon. Friend need not be concerned about the growth in productivity in the economy. Under Labour, the growth in manufacturing productivity was 1 per cent. a year. That is the reality of our achievement. The reduction in inflation is also a major triumph.
What of employment and jobs? Clearly we cannot relax until we make greater progress. I say "greater" progress because progress is being made. In the 18 months to September 1984, total employment was up by nearly 500,000 — an increase of 2 per cent. in total employment. How did our competitors do? It is true that the United States did better, but employment in Japan grew by only 1 per cent., and total employment during the same period fell in France and Germany. The experience of the 1970s utterly refutes the doctrine that the higher the deficit and the faster the increase in money spending, the more rapid the growth in output. There is no correlation whatever. That is not the case.
During the 1970s as a whole, fuelled by an ever-increasing public sector borrowing requirement, total money spending rose by 15 per cent. a year, yet real demand in output rose by only 2 per cent. a year. This year and next year the underlying growth in money demand will be 7 or 8 per cent.—half the growth during the 1970s. Far from that proving to be inflationary, the underlying growth rate in real demand has risen to about 3 per cent. a year.
The notion that the key to faster growth is to borrow more and to spend more is certainly not a belief shared by any other Government. Governments from Socialist Spain to Republican America are striving to reduce, not to increase, their deficits. Have the Leader of the Opposition or the right hon. Member for Sparkbrook spoken to their Socialist brothers in France of late? They might be able to tell them a thing or two about the practicality of Labour's alternative Budget. Have the leaders of the two alliance parties tried to persuade their namesakes in Sweden, Germany or Japan of the virtues of bigger deficits and uncontrolled public spending? I suspect that their replies would have been phrased in terms that would be regarded by you, Mr. Deputy Speaker, as unparliamentary.
In the whole of Europe, the two major countries with the smallest budget deficits as a percentage of GDP—Germany, which has the smallest deficit, and Britain, which comes second—have continued to have the most rapid rate of economic growth in the European Community.
We shall stick to the course we are on, not out of dogma but out of common sense. We shall stick to it because it is delivering the goods better than any other policy could. We shall stick to it because there is no alternative, because the Opposition are bankrupt of ideas and all we hear are the tired nostrums of the 1960s and 1970s which led us into inflationary disaster, low growth, low productivity and low profitability — the problems from which this Government have succeeded in liberating the economy and the energies of our people.
Of course, there is much still to be done in creating a better supply side and better economic prospects for our

people. That is what this Budget is about. This Budget has been an important further step on the road to more jobs and a more successful economy. We shall continue with this policy. It is proving the most successful that could be produced, and it will continue to bring further success. I commend the Budget to the House.
Question put:—

The House divided: Ayes 355, Noes 202.

Division No. 163]
[10 pm


AYES


Adley, Robert
Cope, John


Aitken, Jonathan
Cormack, Patrick


Alison, Rt Hon Michael
Corrie, John


Amery, Rt Hon Julian
Couchman, James


Amess, David
Critchley, Julian


Ancram, Michael
Crouch, David


Arnold, Tom
Currie, Mrs Edwina


Ashby, David
Dickens, Geoffrey


Aspinwall, Jack
Dicks, Terry


Atkins, Robert (South Ribble)
Dorrell, Stephen


Atkinson, David (B'm'th E)
Douglas-Hamilton, Lord J.


Baker, Rt Hon K. (Mole Vall'y)
Dover, Den


Baker, Nicholas (N Dorset)
du Cann, Rt Hon Sir Edward


Baldry, Tony
Dunn, Robert


Banks, Robert (Harrogate)
Durant, Tony


Batiste, Spencer
Dykes, Hugh


Beaumont-Dark, Anthony
Edwards, Rt Hon N. (P'broke)


Bellingham, Henry
Eggar, Tim


Bendell, Vivian
Evennett, David


Bennett, Rt Hon Sir Frederic
Eyre, Sir Reginald


Benyon, William
Fallon, Michael


Best, Keith
Farr, Sir John


Bevan, David Gilroy
Favell, Anthony


Biffen, Rt Hon John
Fenner, Mrs Peggy


Biggs-Davison, Sir John
Finsberg, Sir Geoffrey


Blackburn, John
Fletcher, Alexander


Blaker, Rt Hon Sir Peter
Fookes, Miss Janet


Body, Richard
Forman, Nigel


Bonsor, Sir Nicholas
Forsyth, Michael (Stirling)


Bottomley, Peter
Forth, Eric


Bottomley, Mrs Virginia
Fowler, Rt Hon Norman


Bowden, A. (Brighton K'to'n)
Fox, Marcus


Bowden, Gerald (Dulwich)
Franks, Cecil


Boyson, Dr Rhodes
Fraser, Peter (Angus East)


Brandon-Bravo, Martin
Fry, Peter


Bright, Graham
Gale, Roger


Brinton, Tim
Galley, Roy


Britten, Rt Hon Leon
Gardiner, George (Reigate)


Brooke, Hon Peter
Gardner, Sir Edward (Fylde)


Brown, M. (Brigg &amp; Cl'thpes)
Garel-Jones, Tristan


Browne, John
Gilmour, Rt Hon Sir Ian


Bruinvels, Peter
Glyn, Dr Alan


Bryan, Sir Paul
Goodhart, Sir Philip


Buchanan-Smith, Rt Hon A.
Goodlad, Alastair


Buck, Sir Antony
Gow, Ian


Budgen, Nick
Gower, Sir Raymond


Bulmer, Esmond
Grant, Sir Anthony


Burt, Alistair
Greenway, Harry


Butcher, John
Gregory, Conal


Butler, Hon Adam
Griffiths, E. (B'y St Edm'ds)


Butterfill, John
Griffiths, Peter (Portsm'th N)


Carlisle, John (N Luton)
Grist, Ian


Carlisle, Kenneth (Lincoln)
Ground, Patrick


Carlisle, Rt Hon M. (W'ton S)
Grylls, Michael


Cash, William
Gummer, John Selwyn


Chalker, Mrs Lynda
Hamilton, Hon A. (Epsom)


Channon, Rt Hon Paul
Hamilton, Neil (Tatton)


Chapman, Sydney
Hampson, Dr Keith


Chope, Christopher
Hanley, Jeremy


Clark, Hon A. (Plym'th S'n)
Hannam, John


Clark, Dr Michael (Rochford)
Hargreaves, Kenneth


Clark, Sir W. (Croydon S)
Harris, David


Clarke, Rt Hon K. (Rushcliffe)
Harvey, Robert


Clegg, Sir Walter
Haselhurst, Alan


Cockeram, Eric
Havers, Rt Hon Sir Michael


Colvin, Michael
Hawkins, C. (High Peak)


Coombs, Simon
Hawkins, Sir Paul (SW N'folk)






Hawksley. Warren
Miscampbell, Norman


Hayes, J.
Mitchell, David (NW Hants)


Hayhoe, Barney
Moate, Roger


Hayward, Robert
Monro, Sir Hector


Heath, Rt Hon Edward
Montgomery, Sir Fergus


Heathcoat-Amory, David
Moore, John


Heddle, John
Morris, M. (N'hampton, S)


Henderson, Barry
Morrison, Hon C. (Devizes)


Hickmet, Richard
Morrison, Hon P. (Chester)


Hicks, Robert
Moynihan, Hon C.


Hill, James
Mudd, David


Hind, Kenneth
Murphy, Christopher


Hirst, Michael
Neale, Gerrard


Hogg, Hon Douglas (Gr'th'm)
Needham, Richard


Holt, Richard
Nelson, Anthony


Hordern, Peter
Neubert, Michael


Howard, Michael
Newton, Tony


Howarth, Alan (Stratf'd-on-A)
Nicholls, Patrick


Howarth, Gerald (Cannock)
Normanton, Tom


Howell, Rt Hon D. (G'ldford)
Norris, Steven


Howell, Ralph (N Norfolk)
Onslow, Cranley


Hunt, David (Wirral)
Oppenheim, Phillip


Hunt, John (Ravensbourne)
Oppenheim, Rt Hon Mrs S.


Hunter, Andrew
Osborn, Sir John


Irving, Charles
Ottaway, Richard


Jenkin, Rt Hon Patrick
Page, Richard (Herts SW)


Jessel, Toby
Parris, Matthew


Johnson Smith, Sir Geoffrey
Patten, Christopher (Bath)


Jones, Gwilym (Cardiff N)
Patten, J. (Oxf W &amp; Abdgn)


Jones, Robert (W Herts)
Pattie, Geoffrey


Kellett-Bowman, Mrs Elaine
Pawsey, James


Kershaw, Sir Anthony
Peacock, Mrs Elizabeth


Key, Robert
Percival, Rt Hon Sir Ian


King, Roger (B'ham N'field)
Pollock, Alexander


King, Rt Hon Tom
Portillo, Michael


Knight, Gregory (Derby N)
Powell, William (Corby)


Knight, Mrs Jill (Edgbaston)
Powley, John


Knox, David
Prentice, Rt Hon Reg


Lamont, Norman
Prior, Rt Hon James


Lang, Ian
Proctor, K. Harvey


Latham, Michael
Pym, Rt Hon Francis


Lawler, Geoffrey
Raffan, Keith


Lawrence, Ivan
Raison, Rt Hon Timothy


Lawson, Rt Hon Nigel
Rathbone, Tim


Lee, John (Pendle)
Rees, Rt Hon Peter (Dover)


Lennox-Boyd, Hon Mark
Renton, Tim


Lester, Jim
Rhodes James, Robert


Lewis, Sir Kenneth (Stamf'd)
Rhys Williams, Sir Brandon


Lilley, Peter
Ridley, Rt Hon Nicholas


Lloyd, Ian (Havant)
Ridsdale, Sir Julian


Lloyd, Peter, (Fareham)
Rifkind, Malcolm


Lord, Michael
Roberts, Wyn (Conwy)


Luce, Richard
Robinson, Mark (N'port W)


Lyell, Nicholas
Roe, Mrs Marion


McCrindle, Robert
Rossi, Sir Hugh


McCurley, Mrs Anna
Rost, Peter


Macfarlane, Neil
Rowe, Andrew


MacGregor, John
Rumbold, Mrs Angela


MacKay, Andrew (Berkshire)
Ryder, Richard


MacKay, John (Argyll &amp; Bute)
Sackville, Hon Thomas


Maclean, David John
Sainsbury, Hon Timothy


McNair-Wilson, P. (New F'st)
St. John-Stevas, Rt Hon N.


McQuarrie, Albert
Sayeed, Jonathan


Madel, David
Scott, Nicholas


Major, John
Shaw, Giles (Pudsey)


Malins, Humfrey
Shaw, Sir Michael (Scarb')


Malone, Gerald
Shelton, William (Streatham)


Maples, John
Shepherd, Colin (Hereford)


Marland, Paul
Shepherd, Richard (Aldridge)


Marlow, Antony
Shersby, Michael


Maude, Hon Francis
Silvester, Fred


Mawhinney, Dr Brian
Sims, Roger


Maxwell-Hyslop, Robin
Skeet, T. H. H.


Mayhew, Sir Patrick
Smith, Sir Dudley (Warwick)


Mellor, David
Smith, Tim (Beaconsfield)


Merchant, Piers
Soames, Hon Nicholas


Meyer, Sir Anthony
Speller, Tony


Miller, Hal (B'grove)
Spence, John


Mills, Iain (Meriden)
Spencer, Derek


Mills, Sir Peter (West Devon)
Spicer, Jim (W Dorset)





Spicer, Michael (S Worcs)
Viggers, Peter


Squire, Robin
Waddington, David


Stanbrook, Ivor
Wakeham, Rt Hon John


Stanley, John
Waldegrave, Hon William


Steen, Anthony
Walden, George


Stern, Michael
Walker, Bill (T'side N)


Stevens, Lewis (Nuneaton)
Walker, Rt Hon P. (W'cester)


Stevens, Martin (Fulham)
Wall, Sir Patrick


Stewart, Allan (Eastwood)
Waller, Gary


Stewart, Andrew (Sherwood)
Walters, Dennis


Stewart, Ian (N Hertf'dshire)
Ward, John


Stokes, John
Wardle, C. (Bexhill)


Stradling Thomas, J.
Warren, Kenneth


Sumberg, David
Watson, John


Taylor, John (Solihull)
Watts, John


Taylor, Teddy (S'end E)
Wells, Bowen (Hertford)


Tebbit, Rt Hon Norman
Wells, Sir John (Maidstone)


Temple-Morris, Peter
Wheeler, John


Terlezki, Stefan
Whitney, Raymond


Thatcher, Rt Hon Mrs M.
Wilkinson, John


Thomas, Rt Hon Peter
Winterton, Mrs Ann


Thompson, Donald (Calder V)
Winterton, Nicholas


Thompson, Patrick (N'ich N)
Wolfson, Mark


Thornton, Malcolm
Wood, Timothy


Thurnham, Peter
Woodcock, Michael


Townend, John (Bridlington)
Yeo, Tim


Townsend, Cyril D. (B'heath)
Young, Sir George (Acton)


Tracey, Richard
Younger, Rt Hon George


Trippier, David



Trotter, Neville
Tellers for the Ayes:


Twinn, Dr Ian
Mr. Carol Mather and


van Straubenzee, Sir W.
Mr. Robert Boscawen.


Vaughan, Sir Gerard



NOES


Abse, Leo
Coleman, Donald


Adams, Allen (Paisley N)
Concannon, Rt Hon J. D.


Alton, David
Conlan, Bernard


Anderson, Donald
Cook, Frank (Stockton North)


Archer, Rt Hon Peter
Corbyn, Jeremy


Ashley, Rt Hon Jack
Cowans, Harry


Ashton, Joe
Cox, Thomas (Tooting)


Atkinson, N. (Tottenham)
Craigen, J. M.


Bagier, Gordon A. T.
Crowther, Stan


Banks, Tony (Newham NW)
Cunliffe, Lawrence


Barnett, Guy
Cunningham, Dr John


Barron, Kevin
Davies, Rt Hon Denzil (L'lli)


Beckett, Mrs Margaret
Davies, Ronald (Caerphilly)


Beith, A, J.
Davis, Terry (B'ham, H'ge H'l)


Bell, Stuart
Deakins, Eric


Benn, Tony
Dewar, Donald


Bennett, A. (Dent'n &amp; Red'sh)
Dixon, Donald


Bermingham, Gerald
Dobson, Frank


Bidwell, Sydney
Dormand, Jack


Blair, Anthony
Dubs, Alfred


Boothroyd, Miss Betty
Duffy, A. E. P.


Boyes, Roland
Dunwoody, Hon Mrs G.


Bray, Dr Jeremy
Eadie, Alex


Brown, Gordon (D'f'mline E)
Eastham, Ken


Brown, Hugh D. (Provan)
Edwards, Bob (W'h'mpt'n SE)


Brown, N. (N'c'tle-u-Tyne E)
Evans, John (St. Helens N)


Brown, R. (N'c'tle-u-Tyne N)
Ewing, Harry


Brown, Ron (E'burgh, Leith)
Fatchett, Derek


Bruce, Malcolm
Field, Frank (Birkenhead)


Buchan, Norman
Fields, T. (L'pool Broad Gn)


Caborn, Richard
Fisher, Mark


Callaghan, Rt Hon J.
Flannery, Martin


Callaghan, Jim (Heyw'd &amp; M)
Foot, Rt Hon Michael


Campbell, Ian
Forrester, John


Campbell-Savours, Dale
Foster, Derek


Canavan, Dennis
Fraser, J. (Norwood)


Carlile, Alexander (Montg'y)
Freeson, Rt Hon Reginald


Carter-Jones, Lewis
Freud, Clement


Cartwright, John
Garrett, W. E.


Clark, Dr David (S Shields)
Golding, John


Clarke, Thomas
Gourlay, Harry


Clay, Robert
Hamilton, James (M'well N)


Clwyd, Mrs Ann
Hamilton, W. W. (Central Fife)


Cocks, Rt Hon M. (Bristol S.)
Hancock, Mr. Michael


Cohen, Harry
Hardy, Peter






Harrison, Rt Hon Walter
O'Neill, Martin


Hart, Rt Hon Dame Judith
Orme, Rt Hon Stanley


Hattersley, Rt Hon Roy
Owen, Rt Hon Dr David


Haynes, Frank
Paisley, Rev Ian


Heffer, Eric S.
Park, George


Hogg, N. (C'nauld &amp; Kilsyth)
Parry, Robert


Holland, Stuart (Vauxhall)
Patchett, Terry


Home Robertson, John
Pendry, Tom


Hoyle, Douglas
Penhaligon, David


Hughes, Robert (Aberdeen N)
Pike, Peter


Hughes, Roy (Newport East)
Powell, Raymond (Ogmore)


Hughes, Sean (Knowsley S)
Prescott, John


Hughes, Simon (Southwark)
Radice, Giles


Janner, Hon Greville
Redmond, M.


Jenkins, Rt Hon Roy (Hillh'd)
Rees, Rt Hon M. (Leeds S)


John, Brynmor
Richardson, Ms Jo


Johnston, Russell
Roberts, Ernest (Hackney N)


Jones, Barry (Alyn &amp; Deeside)
Robinson, P. (Belfast E)


Kaufman, Rt Hon Gerald
Rogers, Allan


Kennedy, Charles
Rooker, J. W.


Kilroy-Silk, Robert
Ross, Stephen (Isle of Wight)


Kirkwood, Archy
Rowlands, Ted


Lambie, David
Ryman, John


Lamond, James
Sheerman, Barry


Leadbitter, Ted
Sheldon, Rt Hon R.


Leighton, Ronald
Shore, Rt Hon Peter


Lewis, Ron (Carlisle)
Short, Mrs H.(W'hampt'n NE)


Lewis, Terence (Worsley)
Silkin, Rt Hon J.


Litherland, Robert
Skinner, Dennis


Lloyd, Tony (Stretford)
Smith, C.(Isl'ton S &amp; F'bury)


Loyden, Edward
Smith, Cyril (Rochdale)


McCartney, Hugh
Smith, Rt Hon J. (M'kl'ds E)


McCrea, Rev William
Soley, Clive


McDonald, Dr Oonagh
Spearing, Nigel


McKay, Allen (Penistone)
Steel, Rt Hon David


Mackenzie, Rt Hon Gregor
Stewart, Rt Hon D. (W Isles)


Maclennan, Robert
Stott, Roger


McNamara, Kevin
Straw, Jack


McTaggart, Robert
Thomas, Dafydd (Merioneth)


McWilliam, John
Thomas, Dr R. (Carmarthen)


Madden, Max
Thorne, Stan (Preston)


Marek, Dr John
Tinn, James


Marshall, David (Shettleston)
Torney, Tom


Martin, Michael
Wainwright, R.


Mason, Rt Hon Roy
Wallace, James


Maynard, Miss Joan
Wardell, Gareth (Gower)


Meacher, Michael
Wareing, Robert


Meadowcroft, Michael
Weetch, Ken


Michie, William
Williams, Rt Hon A.


Mikardo, Ian
Wilson, Gordon


Millan, Rt Hon Bruce
Winnick, David


Miller, Dr M. S. (E Kilbride)
Woodall, Alec


Mitchell, Austin (G't Grimsby)
Wrigglesworth, Ian


Morris, Rt Hon A. (W'shawe)
Young, David (Bolton SE)


Morris, Rt Hon J. (Aberavon)



Nellist, David
Tellers for the Noes:


Oakes, Rt Hon Gordon
Mr. John Maxton and


O'Brien, William
Mr. Robin Corbett.

Question accordingly agreed to

Resolved,
That it is expedient to amend the law with respect to the National Debt and public revenue and to make further provision

in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;
(b) for refunding any amount of tax, otherwise than by a provision relating to the insolvency of a person to whom goods or services have been supplied;
(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(d) for any relief other than relief applying to goods of whatever description or services of whatever description.

Mr. Deputy Speaker (Sir Paul Dean): I am now required under Standing Order No. 114 to put successively, without further debate, the questions on each of the Ways and Means motions Nos. 2 to 43 and the motion of procedure, on all of which a Finance Bill will be brought in. The House will be relieved to know that I do not intend to read out the motions. I propose to follow the procedure used in recent years: that is to say, I shall first state the number of the motion or blocks of motions and put the question. I understand that Divisions are desired on motions Nos. 8 and 10, in which case, with the leave of the House, I will put motions Nos. 2 to 7 together.

2. SPIRITS

Motion made, and Question,
That, as from 20th March 1985, the rate of duty specified in section 5 of the Alcoholic Liquor Duties Act 1979 shall be increased from £15·48 per litre of alcohol in the spirits to £15·77 per litre of alcohol in the spirits.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.— [Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

3. BEER

Motion made, and Question,
That, as from 20th March 1985, the rates of duty specified in section 36 of the Alcoholic Liquor Duties Act 1979 shall be increased—

(a) from £24·00 for each hectolitre to £25·80 for each hectolitre; and
(b) from £0·80 for each additional degree of original gravity exceeding 1030 degrees to £0·86 for each such additional degree.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

4. WINE AND MADE-WINE

Motion made, and Question,
That, as from 20th March 1985, the rates of duty under sections 54 and 55 of the Alcoholic Liquor Duties Act 1979 shall be as follows—

Budget Resolutions and Economic Resolutions


Description of made-wine
Rates of duty per hectoliter



£


(1) Wine or made-wine of a strength less than 15 per cent. and not being sparkling … … … … … …
98·00


(2) Sparkling wine or sparkling made-wine of a strength of less than 15 per cent. … … … … … …
161·80


(3) Wine or made-wine of a strength of not less than 15 per cent. but not exceeding 18 per cent. … … …
169·00


(4) Wine or made-wine of a strength exceeding 18 per cent. but not exceeding 22 per cent. … … … …
194·90


(5) Wine or made-wine of a strength exceeding 22 per cent. … … … … … … … … … … …
194·90 plus



£15·77 for every 1 per cent. or part of 1 per cent. in excess of 22 per cent.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968. —[Mr. Lawson.]

put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

5. BLENDING OF WINES SUBJECT TO DIFFERENT DUTY RATES

Motion made, and Question,
That, with respect to the blending or otherwise mixing of wines on or after 26th March 1985, section 54 of the Alcoholic Liquor Duties Act 1979 (charge of excise duty on wine) shall have effect with the insertion, after subsection (3), of the following subsections:—
(3A) For the purposes of this Act, the process of blending or otherwise mixing two or more wines (in this subsection and subsection (3B) below referred to as "the constituent wines") constitutes the production of wine if—

(a) the rate of duty applicable to one of the constituent wines is different from that applicable to the other or, as the case may be, at least one of the others; and
(b)the rate of duty applicable to the wine which is the product of the blending or other mixing is higher than that which is applicable to at least one of the constituent wines; and
(c) the blending or other mixing is with a view to dealing wholesale in the wine which is the product thereof;

and for the purposes of this subsection the rate of duty applicable to any wine is that which is or would be chargeable under subsection (1) above on its importation into the United Kingdom or, as the case may be, on its production as mentioned in paragraph (b) of that subsection.
(3B) Where, by virtue of subsection (3A) above, wine is produced in the United Kingdom, duty shall be chargeable on that wine by virtue of paragraph (b) of subsection (1) above whether or not duty was previously charged on all or any of the constituent wines by virtue of paragraph (a) or paragraph (b) of that subsection; but nothing in this subsection shall affect the operation of any regulations under section 56 below giving relief from duty on wine so produced by reference to duty charged on all or any of the constituent wines.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968. —[Mr. Lawson.]

put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

6. CIDER

Motion made, and Question,
That, as from 20th March 1985, the rate of duty specified in section 62(1) of the Alcoholic Liquor Duties Act 1979 shall be increased from £14·28 per hectolitre to £15·80 per hectolitre.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

7. TOBACCO PRODUCTS

Motion made, and Question,
That, as from 22nd March 1985, the rates of duty on cigarettes and hand-rolling tobacco specified in Schedule 1 to the Tobacco Products Duty Act 1979 shall be increased—

(a) in the case of cigarettes, to an amount equal to 21 per cent. of the retail price plus £26·95 per thousand cigarettes, and
(b) in the case of hand-rolling tobacco, to £43·73 per kilogram.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

8. HYDROCARBON OIL

Motion made, and Question,
That, as from 6 o'clock in the evening of 19th March 1985, the rates of duty specified in section 6(1) of the Hydrocarbon Oil Duties Act 1979 shall be increased—

(a) in the case of light oil, from £0·1716 a litre to £0·1794 a litre; and
b in the case of heavy oil, from £0·1448 a litre to £0·1515 a litre.

And it is hereby declared that it is expedient in the public interests that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
As Amendments to Mr. Chancellor of the Exchequer's proposed Motion (Hydrocarbon oil):
Mr Albert McQuarrie
Line 3, leave out `£0·1794' and insert `£0·1735'.


Mr Albert McQuarrie
Line 4, leave out '£0·1515' and insert '£0·1465'. —[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions):—

The House divided: Ayes 354, Noes 183.

Division No. 164]
[10.15 pm


AYES


Adley, Robert
Cormack, Patrick


Aitken, Jonathan
Corrie, John


Alison, Rt Hon Michael
Couchman, James


Amery, Rt Hon Julian
Critchley, Julian


Amess, David
Crouch, David


Ancram, Michael
Currie, Mrs Edwina


Arnold, Tom
Dickens, Geoffrey


Ashby, David
Dicks, Terry


Aspinwall, Jack
Dorrell, Stephen


Atkins, Robert (South Ribble)
Douglas-Hamilton, Lord J.


Atkinson, David (B'm'th E)
Dover, Den


Baker, Rt Hon K. (Mole Vall'y)
du Cann, Rt Hon Sir Edward


Baker, Nicholas (N Dorset)
Dunn, Robert


Baldry, Tony
Durant, Tony


Banks, Robert (Harrogate)
Dykes, Hugh


Batiste, Spencer
Edwards, Rt Hon N. (P'broke)


Beaumont-Dark, Anthony
Eggar, Tim


Bellingham, Henry
Emery, Sir Peter


Bendall, Vivian
Evennett, David


Bennett, Rt Hon Sir Frederic
Eyre, Sir Reginald


Benyon, William
Fallon, Michael


Best, Keith
Farr, Sir John


Bevan, David Gilroy
Favell, Anthony


Biffen, Rt Hon John
Fenner, Mrs Peggy


Biggs-Davison, Sir John
Finsberg, Sir Geoffrey


Blackburn, John
Fletcher, Alexander


Blaker, Rt Hon Sir Peter
Fookes, Miss Janet


Body, Richard
Forman, Nigel


Bonsor, Sir Nicholas
Forsyth, Michael (Stirling)


Bottomley, Peter
Forth, Eric


Bottomley, Mrs Virginia
Fowler, Rt Hon Norman


Bowden, A. (Brighton K'to'n)
Fox, Marcus


Bowden, Gerald (Dulwich)
Franks, Cecil


Boyson, Dr Rhodes
Fraser, Peter (Angus East)


Brandon-Bravo, Martin
Fry, Peter


Bright, Graham
Gale, Roger


Brinton, Tim
Galley, Roy


Brittan, Rt Hon Leon
Gardiner, George (Reigate)


Brooke, Hon Peter
Gardner, Sir Edward (Fylde)


Brown, M. (Brigg &amp; Cl'thpes)
Garel-Jones, Tristan


Browne, John
Gilmour, Rt Hon Sir Ian


Bruinvels, Peter
Glyn, Dr Alan


Bryan, Sir Paul
Goodhart, Sir Philip


Buchanan-Smith, Rt Hon A.
Goodlad, Alastair


Buck, Sir Antony
Gow, Ian


Budgen, Nick
Gower, Sir Raymond


Bulmer, Esmond
Grant, Sir Anthony


Burt, Alistair
Greenway, Harry


Butcher, John
Gregory, Conal


Butler, Hon Adam
Griffiths, E. (B'y St Edm'ds)


Butterfill, John
Griffiths, Peter (Portsm'th N)


Carlisle, John (N Luton)
Grist, Ian


Carlisle, Kenneth (Lincoln)
Ground, Patrick


Carlisle, Rt Hon M. (W'ton S)
Grylls, Michael


Cash, William
Gummer, John Selwyn


Chalker, Mrs Lynda
Hamilton, Hon A. (Epsom)


Channon, Rt Hon Paul
Hamilton, Neil (Tatton)


Chapman, Sydney
Hampson, Dr Keith


Chope, Christopher
Hanley, Jeremy


Clark, Hon A. (Plym'th S'n)
Hannam, John


Clark, Dr Michael (Rochford)
Hargreaves, Kenneth


Clark, Sir W. (Croydon S)
Harris, David


Clarke, Rt Hon K. (Rushcliffe)
Harvey, Robert


Clegg, Sir Walter
Haselhurst, Alan


Cockeram, Eric
Havers, Rt Hon Sir Michael


Colvin, Michael
Hawkins, C. (High Peak)


Coombs, Simon
Hawkins, Sir Paul (SW N'folk)


Cope, John
Hawksley, Warren





Hayes, J.
Moate, Roger


Hayhoe, Barney
Monro, Sir Hector


Hayward, Robert
Montgomery, Sir Fergus


Heath, Rt Hon Edward
Moore, John


Heathcoat-Amory, David
Morris, M. (N'hampton, S)


Heddle, John
Morrison, Hon C. (Devizes)


Henderson, Barry
Morrison, Hon P. (Chester)


Hickmet, Richard
Moynihan, Hon C.


Hicks, Robert
Mudd, David


Hill, James
Murphy, Christopher


Hind, Kenneth
Neale, Gerrard


Hirst, Michael
Needham, Richard


Hogg, Hon Douglas (Gr'th'm)
Nelson, Anthony


Holt, Richard
Neubert, Michael


Hordern, Peter
Newton, Tony


Howard, Michael
Nicholls, Patrick


Howarth, Alan (Stratf'd-on-A)
Normanton, Tom


Howarth, Gerald (Cannock)
Norris, Steven


Howell, Rt Hon D. (G'ldford)
Onslow, Cranley


Howell, Ralph (N Norfolk)
Oppenheim, Phillip


Hume, John
Oppenheim, Rt Hon Mrs S.


Hunt, David (Wirral)
Osborn, Sir John


Hunter, Andrew
Ottaway, Richard


Irving, Charles
Page, Richard (Herts SW)


Jenkin, Rt Hon Patrick
Parris, Matthew


Jessel, Toby
Patten, Christopher (Bath)


Johnson Smith, Sir Geoffrey
Patten, J. (Oxf W &amp; Abdgn)


Jones, Gwilym (Cardiff N)
Pattie, Geoffrey


Jones, Robert (W Herts)
Pawsey, James


Kellett-Bowman, Mrs Elaine
Peacock, Mrs Elizabeth


Kershaw, Sir Anthony
Percival, Rt Hon Sir Ian


Key, Robert
Pollock, Alexander


King, Roger (B'ham N'field)
Portillo, Michael


King, Rt Hon Tom
Powell, William (Corby)


Knight, Gregory (Derby N)
Powley, John


Knight, Mrs Jill (Edgbaston)
Prentice, Rt Hon Reg


Knox, David
Prior, Rt Hon James


Lamont, Norman
Proctor, K. Harvey


Lang, Ian
Pym, Rt Hon Francis


Latham, Michael
Raffan, Keith


Lawler, Geoffrey
Raison, Rt Hon Timothy


Lawrence, Ivan
Rathbone, Tim


Lawson, Rt Hon Nigel
Rees, Rt Hon Peter (Dover)


Lee, John (Pendle)
Renton, Tim


Lennox-Boyd, Hon Mark
Rhodes James, Robert


Lester, Jim
Ridley, Rt Hon Nicholas


Lewis, Sir Kenneth (Stamf'd)
Ridsdale, Sir Julian


Lilley, Peter
Rifkind, Malcolm


Lloyd, Ian (Havant)
Roberts, Wyn (Conwy)


Lloyd, Peter, (Fareham)
Robinson, Mark (N'port W)


Lord, Michael
Roe, Mrs Marion


Luce, Richard
Rossi, Sir Hugh


Lyell, Nicholas
Rost, Peter


McCrindle, Robert
Rowe, Andrew


McCurley, Mrs Anna
Rumbold, Mrs Angela


Macfarlane, Neil
Ryder, Richard


MacGregor, John
Sackville, Hon Thomas


MacKay, Andrew (Berkshire)
Sainsbury, Hon Timothy


MacKay, John (Argyll &amp; Bute)
St. John-Stevas, Rt Hon N.


Maclean, David John
Sayeed, Jonathan


McNair-Wilson, P. (New F'st)
Scott, Nicholas


Madel, David
Shaw, Giles (Pudsey)


Major, John
Shaw, Sir Michael (Scarb')


Malins, Humfrey
Shelton, William (Streatham)


Malone, Gerald
Shepherd, Colin (Hereford)


Maples, John
Shepherd, Richard (Aldridge)


Marland, Paul
Shersby, Michael


Marlow, Antony
Silvester, Fred


Maude, Hon Francis
Sims, Roger


Mawhinney, Dr Brian
Skeet, T. H. H.


Maxwell-Hyslop, Robin
Smith, Sir Dudley (Warwick)


Mayhew, Sir Patrick
Smith, Tim (Beaconsfield)


Mellon David
Soames, Hon Nicholas


Merchant, Piers
Speller, Tony


Meyer, Sir Anthony
Spence, John


Miller, Hal (B'grove)
Spencer, Derek


Mills, Iain (Meriden)
Spicer, Jim (W Dorset)


Mills, Sir Peter (West Devon)
Spicer, Michael (S Worcs)


Miscampbell, Norman
Squire, Robin


Mitchell, David (NW Hants)
Stanbrook, Ivor






Stanley, John
Waddington, David


Steen, Anthony
Wakeham, Rt Hon John


Stern, Michael
Waldegrave, Hon William


Stevens, Lewis (Nuneaton)
Walden, George


Stevens, Martin (Fulham)
Walker, Bill (T'side N)


Stewart, Allan (Eastwood)
Walker, Rt Hon P. (W'cester)


Stewart, Andrew (Sherwood)
Wall, Sir Patrick


Stewart, Ian (N Hertf'dshire)
Waller, Gary


Stokes, John
Walters, Dennis


Stradling Thomas, J.
Ward, John


Sumberg, David
Wardle, C. (Bexhill)


Taylor, John (Solihull)
Warren, Kenneth


Taylor, Teddy (S'end E)
Watson, John


Tebbit, Rt Hon Norman
Watts, John


Temple-Morris, Peter
Wells, Bowen (Hertford)


Terlezki, Stefan
Wells, Sir John (Maidstone)


Thatcher, Rt Hon Mrs M.
Wheeler, John


Thomas, Rt Hon Peter
Whitney, Raymond


Thompson, Donald (Calder V)
Wilkinson, John


Thompson, Patrick (N'ich N)
Winterton, Mrs Ann


Thornton, Malcolm
Winterton, Nicholas


Thurnham, Peter
Wolfson, Mark


Townend, John (Bridlington)
Wood, Timothy


Townsend, Cyril D. (B'heath)
Woodcock, Michael


Tracey, Richard
Yeo, Tim


Trippier, David
Young, Sir George (Acton)


Trotter, Neville
Younger, Rt Hon George


Twinn, Dr Ian



van Straubenzee, Sir W.
Tellers for the Ayes:


Vaughan, Sir Gerard
Mr. Carol Mather and


Viggers, Peter
Mr. Robert Boscawen.


NOES


Abse, Leo
Cowans, Harry


Adams, Allen (Paisley N)
Cox, Thomas (Tooting)


Anderson, Donald
Craigen, J. M.


Archer, Rt Hon Peter
Crowther, Stan


Ashley, Rt Hon Jack
Cunliffe, Lawrence


Ashton, Joe
Cunningham, Dr John


Atkinson, N. (Tottenham)
Davies, Rt Hon Denzil (L'lli)


Bagier, Gordon A. T.
Davies, Ronald (Caerphilly)


Banks, Tony (Newham NW)
Davis, Terry (B'ham, H'ge H'l)


Barnett, Guy
Deakins, Eric


Barron, Kevin
Dewar, Donald


Beckett, Mrs Margaret
Dixon, Donald


Bell, Stuart
Dobson, Frank


Benn, Tony
Dormand, Jack


Bennett, A. (Dent'n &amp; Red'sh)
Dubs, Alfred


Bermingham, Gerald
Duffy, A. E. P.


Bidwell, Sydney
Dunwoody, Hon Mrs G.


Blair, Anthony
Eadie, Alex


Boothroyd, Miss Betty
Eastham, Ken


Boyes, Roland
Edwards, Bob (W'h'mpt'n SE)


Bray, Dr Jeremy
Evans, John (St. Helens N)


Brown, Gordon (D'f'mline E)
Ewing, Harry


Brown, Hugh D. (Provan)
Fatchett, Derek


Brown, N. (N'c'tle-u-Tyne E)
Field, Frank (Birkenhead)


Brown, R. (N'c'tle-u-Tyne N)
Fields, T. (L'pool Broad Gn)


Brown, Ron (E'burgh, Leith)
Fisher, Mark


Buchan, Norman
Flannery, Martin


Caborn, Richard
Foot, Rt Hon Michael


Callaghan, Rt Hon J.
Forrester, John


Callaghan, Jim (Heyw'd &amp; M)
Foster, Derek


Campbell, Ian
Fraser, J. (Norwood)


Campbell-Savours, Dale
Freeson, Rt Hon Reginald


Canavan, Dennis
Garrett, W. E.


Carter-Jones, Lewis
Golding, John


Clark, Dr David (S Shields)
Gourlay, Harry


Clarke, Thomas
Hamilton, James (M'well N)


Clay, Robert
Hamilton, W. W. (Central Fife)


Clwyd, Mrs Ann
Hardy, Peter


Cocks, Rt Hon M. (Bristol S.)
Harrison, Rt Hon Walter


Cohen, Harry
Hart, Rt Hon Dame Judith


Coleman, Donald
Hattersley, Rt Hon Roy


Concannon, Rt Hon J. D.
Haynes, Frank


Conlan, Bernard
Heffer, Eric S.


Cook, Frank (Stockton North)
Hogg, N. (C'nauld &amp; Kilsyth)


Corbyn, Jeremy
Holland, Stuart (Vauxhall)





Home Robertson, John
Parry, Robert


Hoyle, Douglas
Patchett, Terry


Hughes, Robert (Aberdeen N)
Pendry, Tom


Hughes, Roy (Newport East)
Penhaligon, David


Hughes, Sean (Knowsley S)
Pike, Peter


Janner, Hon Greville
Powell, Raymond (Ogmore)


John, Brynmor
Prescott, John


Jones, Barry (Alyn &amp; Deeside)
Radice, Giles


Kaufman, Rt Hon Gerald
Redmond, M.


Kilroy-Silk, Robert
Rees, Rt Hon M. (Leeds S)


Lambie, David
Richardson, Ms Jo


Lamond, James
Roberts, Ernest (Hackney N)


Leadbitter, Ted
Robinson, P. (Belfast E)


Leighton, Ronald
Rogers, Allan


Lewis, Ron (Carlisle)
Rooker, J. W.


Lewis, Terence (Worsley)
Rowlands, Ted


Litherland, Robert
Ryman, John


Lloyd, Tony (Stretford)
Sheerman, Barry


Loyden, Edward
Sheldon, Rt Hon R


McCartney, Hugh
Shore, Rt Hon Peter


McCrea, Rev William
Short, Mrs H.(W'hampt'n NE)


McDonald, Dr Oonagh
Silkin, Rt Hon J.


McKay, Allen (Penistone)
Skinner, Dennis


Mackenzie, Rt Hon Gregor
Smith, C.(Isl'ton S &amp; F'bury)


McNamara, Kevin
Smith, Cyril (Rochdale)


McTaggart, Robert
Smith, Rt Hon J. (M'kl'ds E)


McWilliam, John
Soley, Clive


Madden, Max
Spearing, Nigel


Marek, Dr John
Stewart, Rt Hon D. (W Isles)


Marshall, David (Shettleston)
Stott, Roger


Martin, Michael
Straw, Jack


Mason, Rt Hon Roy
Thomas, Dafydd (Merioneth)


Maynard, Miss Joan
Thomas, Dr R. (Carmarthen)


Meacher, Michael
Thorne, Stan (Preston)


Michie, William
Tinn, James


Mikardo, Ian
Torney, Tom


Millan, Rt Hon Bruce
Wardell, Gareth (Gower)


Miller, Dr M. S. (E Kilbride)
Wareing, Robert


Mitchell, Austin (G't Grimsby)
Weetch, Ken


Morris, Rt Hon A. (W'shawe)
Williams, Rt Hon A.


Morris, Rt Hon J. (Aberavon)
Wilson, Gordon


Nellist, David
Winnick, David


Oakes, Rt Hon Gordon
Woodall, Alec


O'Brien, William
Young, David (Bolton SE)


O'Neill, Martin



Orme, Rt Hon Stanley
Tellers for the Noes:


Paisley, Rev Ian
Mr. John Maxton and


Park, George
Mr. Robin Corbett.

Question accordingly agreed to.

9. HYDROCARBON OIL (MIXING)

Motion made, and Question,
That provision may be made allowing the Commissioners of customs and Excise to charge a duty of excise on hydrocarbon oil which has become mixed with other hydrocarbon oil.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

10. VEHICLES EXCISE DUTY

Motion made, and Question,
That the vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972 shall have effect, in relation to licences taken out after 19th March 1985, with the amendments set out below.
But this resolution shall not authorise the making of amendments which would result in different provisions being in force in different parts of Great Britain.
And it is hereby declared that it is expedient in the public interest that this resolution should have statutory effect under the provisions of the Provisional collection of Taxes Act 1968.
(1) For the provisinos of Part II of Schedules 1 to 5 to each of the Acts of 1971 and 1972 (annual rates of duty) there shall be substituted the provisions set out below:

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 1 TO ACT OF 1971 AND ACT OF 1972


Description of vehicle
Rate of duty



£


1. Bicycles and tricycles of which the cylinder capacity of the engine does not exceed 150 cubic centimeter … … … … … … … … … …
10·00


2. Bicycles of which the cylinder capacity of the engine exceeds 150 cubic centimetres but does not exceed 250 cubic centimetres; tricycles (other than those in the foregoing paragraph) and vehicles (other than mowing machines) with more than three wheels, being tricycles and vehicles neither constructed nor adapted for use nor used for the carriage of a driver or passenger … … …
20·00


3. Bicycles and tricycles not in the foregoing paragraphs … … … …
40·00

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 2 TO ACT OF 1971 AND ACT OF 1972


Description of vehicle
Rate of duty



£


Hackney carriages … … … … … … … … …
50·00



with an additional £1·00 for each person above 20 (excluding the driver) for which the vehicle has seating capacity.

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 3 TO ACT OF 1971 AND ACT OF 1972



Weight unladen of vehicle
Rate of duty


1.
2.
3.
4.
5.


Description of vehicle
Exceeding
Not exceeding
Intial
Additional for each ton or part of a ton in excess weight in column 2


1. Agricultural machines; digging machines; mobile cranes; works trucks; mowing machines; fishermen's tractors
—
—
£16·00
£—


2. Haulage vehicle, not being showmen's vechicles
—
7¼tons
151·00
—



7¼tons
8 tons
180·00
—



8 tons
10 tons
212·00
—



10 tons
—
212·00
32·50


3. Haulage vehicle, not being showmen's vechicles
—
2 tons
179·00
—



2 tons
4 tons
322·00
—



4 tons
6 tons
465·00
—



6 tons
7¼tons
608·00
—



7¼tons
8 tons
743·00
—



8 tons
9 tons
869·00
—



9 tons
10 tons
995·00
—



10 tons
11 tons
995·00
—



11 tons
—
1,138·00
142·00

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 4 TO ACT OF 1971 AND ACT OF 1972


TABLE A


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING I2 TONNES PLATED GROSS WEIGHT GENERAL RATES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


tonnes
tonnes
£
£
£


12
13
410
320
320


13
14
570
340
340


14
15
740
340
340


15
17
1,030
340
340


17
19
—
490
340


19
21
—
660
340


21
23
—
900
490


23
25
—
1,610
690


25
27
—
—
1,000


27
29
—
—
1,470


29
30.49
—
—
2,420

TABLE A (1)


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING I2 TONNES PLATED GROSS WEIGHT RATES FOR FARMERS' GOODS VEHICLES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


tonnes
tones
£
£
£


12
13
175
145
145


13
14
215
150
150


14
15
255
150
150


15
17
335
160
150


17
19
—
190
150


19
21
—
240
160


21
23
—
295
195


23
25
—
475
245


25
27
—
—
325


27
29
—
—
445


29
30.49
—
—
725

TABLE A (2)


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WEIGHT RATES FOR SHOWMENS GOODS VEHICLES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle Vehicle
Four or more axle vehicle


tonnes
tones
£
£
£


12
13
105
90
90


13
14
145
90
90


14
15
185
90
90


15
17
260
90
90


17
19
—
125
90


19
21
—
165
90


21
23
—
225
125


23
25
—
405
175


25
27
—
—
250

Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


tonnes
tonnes
£
£
£


27
29
—
—
370


29
30.49
—
—
605

TABLE B(1)


SUPPLEMENTARY RATES OF DUTY ON RIGID GOODS VEHICLES OVER 12 TONNES USED FOR DRAWING TRAILERS EXCEEDING 4 TONNES PLATED GROSS WEIGHT


RATES FOR FARMERS' GOODS VEHICLES


Gross weight of trailer
Duty supplement


Exceeding
Not exceeding


tonnes
tonnes
£


4
8
80


8
10
100


10
12
130


12
14
180


14
—
355

TABLE B


SUPPLEMENTARY RATES OF DUTY ON RIGID GOODS VEHICLES OVER I2 TONNES USED FOR DRAWING TRAILERS EXCEEDING 4 TONNES PLATED GROSS WEIGHT


GENERAL RATES


Gross weight of trailer
Duty supplement


Exceeding
Not exceeding


tonnes
tonnes
£


4
8
80


8
10
100


10
12
130


12
14
180


14
—
355

TABLE B(2)


SUPPLEMENTARY RATES OF DUTY ON RIGID GOODS VEHICLES OVER I2 TONNES USED FOR DRAWING TRAILERS EXCEEDING 4 TONNES PLATED GROSS WEIGHT


RATES FOR SHOWMEN'S GOODS VEHICLES


Gross weight of trailer
Duty supplement


Exceeding
Not exceeding


tonnes
tonnes
£


—
—
80

TABLE C


RATES OF DUTY ON TRACTOR UNITS EXCEEDING I2 TONNES PLATED TRAIN WEIGHT AND HAVING ONLY 2 AXLES


GENERAL RATES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used a tractor with semi-trailers with any number of axles
For a tractor unit to be used only with semi-with trailers with not less than two axles
For a tractor unit to be used only with semi-with trailers with not less than three axles


tonnes
tonnes
£
£
£


12
14
470
420
420


14
16
590
440
440


16
18
690
440
440


18
20
810
440
440


20
22
940
550
440


22
23
1,000
620
440


23
25
1,150
780
440


25
26
1,150
870
530


26
28
1,150
1,090
720


28
29
1,210
1,210
820


29
31
1,680
1,680
1,050


31
33
2,450
2,450
1,680


33
34
2,450
2,450
2,250


34
36
2,750
2,750
2,750


36
38
3,100
3,100
3,100

TABLE C(1)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING ONLY 2 AXLES


RATES FOR FARMERS' GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


tonnes
tonnes
£
£
£


12
14
190
175
175


14
16
225
180
180


16
18
250
180
180


18
20
280
180
180


20
22
310
205
180


22
23
325
225
180


23
25
370
265
185


25
26
370
285
210


26
28
370
345
260


28
29
380
380
285


29
31
525
525
355


31
33
755
755
550


33
34
990
990
950


34
36
1,155
1,155
1,155


36
38
1,300
1,300
1,300

TABLE C(2)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING ONLY 2 AXLES


RATES FOR SHOWMEN'S GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


tonnes
tonnes
£
£
£


12
14
120
105
105


14
16
150
110
110


16
18
175
110
110


18
20
205
110
110


20
22
235
140
110


22
23
250
155
110


23
25
290
195
110


25
26
290
220
135


26
28
290
275
180


28
29
305
305
205


29
31
420
420
265


31
33
615
615
420


33
34
615
615
565


34
36
690
690
690


36
38
775
775
775

TABLE D


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING 3 OR MORE AXLES


GENERAL RATES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


tonnes
tonnes
£
£
£


12
14
420
420
420


14
20
440
440
440


20
22
550
440
440


22
23
620
440
440


23
25
780
440
440


25
26
870
440
440


26
28
1,090
440
440


28
29
1,210
440
440


29
31
1,680
640
440


31
33
2,450
970
440


33
34
2,450
1,420
550


34
36
2,450
2,030
830


36
38
2,730
2,730
1,240

TABLE D(1)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING 12 TONNES PLATED TRAIN WEIGHT AND HAVING 3 OR MORE AXLES


RATES FOR FARMERS' GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


tonnes
tonnes
£
£
£


12
14
175
175
175


14
20
180
180
180


20
22
205
180
180


22
23
225
180
180


23
25
265
180
180


25
26
285
185
180


26
28
345
200
190


28
29
380
225
200


29
31
525
270
220


31
33
755
405
240


33
34
805
595
300


34
36
935
855
455


36
38
1,145
1,145
680

TABLE D(2)


RATES OF DUTY ON TRACTOR UNITS EXCEEDING I2 TONNES PLATED TRAIN WEIGHT AND HAVING 3 OR MORE AXLES


RATES FOR SHOWMEN'S GOODS VEHICLES


Plated train weight of tractor unit
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
For a tractor unit to be used with semi-trailers with any number of axles
For a tractor unit to be used only with semi-trailers with not less than two axles
For a tractor unit to be used only with semi-trailers with not less than three axles


tonnes
tonnes
£
£
£


12
14
105
105
105


14
18
110
110
110


18
20
110
110
110


20
22
140
110
110


22
23
155
110
110


23
25
195
110
110


25
26
220
110
110


26
28
275
110
110


28
29
305
130
110


29
31
420
160
110


31
33
615
245
110


33
34
615
355
140


34
36
615
510
210


36
38
685
685
310

PROVISIONS SUBSTITUTED FOR PART II OF SCHEDULE 5 TO ACT OF 1971 AND ACT OF 1972


Description of vehicle
Rate of duty



£


1. Any vehicle first registered under the Roads Act 1920 before 1st January 1947, or which, if its first registration for taxation purposes had been effected in Northern Ireland, would have been so first registered under the Act as in force in Northern Ireland … … … … … … … … … … … … … … …
60·00


2. Other vechiles… … … … … … … … … … … … …
100·00

(2) In section 2(1)(b) of each of the Acts of 1971 and 1972 (six month licence for vehicles with annual rate exceeding £18) for "£18" there shall be substituted "£35".

(3) In section 16 of the Act of 1971 (rates of duty for trade licences) in subsection (5), including that subsection as set out in paragraph 12 of Part I of Schedule 7 to that Act, for "£44" there shall be substituted "£46".

(4) In section 16 of the Act of 1972 (rates of duty for trade licences) in subsection (6), including that subsection as set out in paragraph 12 of Part I of Schedule 9 to that Act, for "£44" there shall be substituted "£46".

(5) In the heading of Schedule 1 to each of the Acts of 1971 and 1972 and in paragraph 1 of Part I of each of those Schedules (annual rates of duty on certain vehicles not exceeding 425 kilograms) for "425 KG." and "425 kilograms" there shall be substituted respectively "450 KG." and "450 kilograms".

(6) In each of the Acts of 1971 and 1972, in paragraph 6(1) of Part I of Schedule 4, for "£67" there shall be substituted "£75".

(7) The following shall be substituted for paragraph 6(2) of Part I of Schedule 4 to the Act of 1971—
(2) If a farmer's goods vehicle or a showman's goods vehicle has a plated gross weight or a plated train weight, the annual rate of duty applicable to it shall be—

(a) if that weight does not exceed 7·5 tonnes, £90;
(b) if that weight exceeds 7·5 tonnes but does not exceed 12 tonnes, £135 in the case of a fanner's goods vehicle and £90 in the case of a showman's goods vehicle; and
(c) if that weight exceeds 12 tonnes, the appropriate Part II rate."

(8) The following shall be substituted for paragraph 6(2) of Part I of Schedule 4 to the Act of 1972—
(2) If a farmer's goods vehicle or a showman's goods vehicle has a relevant maximum weight or a relevant maximum train weight, the annual rate of duty applicable to it shall be—

(a) if that weight does not exceed 7·5 tonnes, £90;
(b) if that weight exceeds 7·5 tonnes but does not exceed 12 tonnes, £135 in the case of a farmer's goods vehicle and £90 in the case of a showman's goods vehicle; and
(c) if that weight exceeds 12 tonnes, the appropriate Part II rate."

(9) In each of the Acts of 1971 and 1972, in paragraph 7 of Part I of Schedule 4, for "£90" there shall be substituted "£100". —[Mr. Lawson.]

put forthwith pursuant to Standing Order No. 114 (Ways and Means motions):—

The House divided: Ayes 351, Noes 197.

Division No. 165]
[10.30 pm


AYES


Adley, Robert
Body, Richard


Aitken, Jonathan
Bonsor, Sir Nicholas


Alison, Rt Hon Michael
Bottomley, Peter


Amery, Rt Hon Julian
Bottomley, Mrs Virginia


Amess, David
Bowden, A. (Brighton K'to'n)


Ancram, Michael
Bowden, Gerald (Dulwich)


Arnold, Tom
Boyson, Dr Rhodes


Ashby, David
Brandon-Bravo, Martin


Aspinwall, Jack
Bright, Graham


Atkins, Robert (South Ribble)
Brinton, Tim


Atkinson, David (B'm'th E)
Brittan, Rt Hon Leon


Baker, Rt Hon K. (Mole Vall'y)
Brooke, Hon Peter


Baker, Nicholas (N Dorset)
Brown, M. (Brigg &amp; Cl'thpes)


Baldry, Tony
Browne, John


Banks, Robert (Harrogate)
Bruinvels, Peter


Batiste, Spencer
Bryan, Sir Paul


Beaumont-Dark, Anthony
Buchanan-Smith, Rt Hon A.


Bellingham, Henry
Buck, Sir Antony


Bendall, Vivian
Budgen, Nick


Bennett, Rt Hon Sir Frederic
Bulmer, Esmond


Benyon, William
Burt, Alistair


Best, Keith
Butcher, John


Bevan, David Gilroy
Butler, Hon Adam


Biffen, Rt Hon John
Butterfill, John


Biggs-Davison, Sir John
Carlisle, John (N Luton)


Blackburn, John
Carlisle, Kenneth (Lincoln)


Blaker, Rt Hon Sir Peter
Carlisle, Rt Hon M. (W'ton S)





Cash, William
Hawkins, Sir Paul (SW N'folk)


Chalker, Mrs Lynda
Hawksley, Warren


Channon, Rt Hon Paul
Hayes, J.


Chapman, Sydney
Hayhoe, Barney


Chope, Christopher
Hayward, Robert


Clark, Hon A. (Plym'th S'n)
Heath, Rt Hon Edward


Clark, Dr Michael (Rochford)
Heathcoat-Amory, David


Clark, Sir W. (Croydon S)
Heddle, John


Clarke, Rt Hon K. (Rushcliffe)
Henderson, Barry


Clegg, Sir Walter
Hickmet, Richard


Cockeram, Eric
Hicks, Robert


Colvin, Michael
Hill, James


Coombs, Simon
Hind, Kenneth


Cope, John
Hirst, Michael


Cormack, Patrick
Hogg, Hon Douglas (Gr'th'm)


Corrie, John
Holt, Richard


Couchman, James
Hordern, Peter


Critchley, Julian
Howard, Michael


Crouch, David
Howarth, Alan (Stratf'd-on-A)


Currie, Mrs Edwina
Howarth, Gerald (Cannock)


Dickens, Geoffrey
Howell, Rt Hon D. (G'ldford)


Dicks, Terry
Howell, Ralph (N Norfolk)


Dorrell, Stephen
Hunt, David (Wirral)


Douglas-Hamilton, Lord J.
Hunt, John (Ravensbourne)


Dover, Den
Hunter, Andrew


du Cann, Rt Hon Sir Edward
Irving, Charles


Dunn, Robert
Jenkin, Rt Hon Patrick


Durant, Tony
Jessel, Toby


Dykes, Hugh
Johnson Smith, Sir Geoffrey


Edwards, Rt Hon N. (P'broke)
Jones, Gwilym (Cardiff N)


Eggar, Tim
Jones, Robert (W Herts)


Emery, Sir Peter
Kellett-Bowman, Mrs Elaine


Evennett, David
Kershaw, Sir Anthony


Eyre, Sir Reginald
Key, Robert


Fallon, Michael
King, Roger (B'ham N'field)


Farr, Sir John
Knight, Gregory (Derby N)


Favell, Anthony
Knight, Mrs Jill (Edgbaston)


Fenner, Mrs Peggy
Knox, David


Finsberg, Sir Geoffrey
Lamont, Norman


Fletcher, Alexander
Lang, Ian


Fookes, Miss Janet
Latham, Michael


Forman, Nigel
Lawler, Geoffrey


Forsyth, Michael (Stirling)
Lawrence, Ivan


Forth, Eric
Lawson, Rt Hon Nigel


Fowler, Rt Hon Norman
Lee, John (Pendle)


Fox, Marcus
Lennox-Boyd, Hon Mark


Franks, Cecil
Lester, Jim


Fraser, Peter (Angus East)
Lewis, Sir Kenneth (Stamf'd)


Fry, Peter
Lilley, Peter


Gale, Roger
Lloyd, Ian (Havant)


Galley, Roy
Lloyd, Peter, (Fareham)


Gardiner, George (Reigate)
Lord, Michael


Gardner, Sir Edward (Fylde)
Luce, Richard


Garel-Jones, Tristan
Lyell, Nicholas


Gilmour, Rt Hon Sir Ian
McCrindle, Robert


Glyn, Dr Alan
McCurley, Mrs Anna


Goodhart, Sir Philip
Macfarlane, Neil


Goodlad, Alastair
MacGregor, John


Gow, Ian
MacKay, Andrew (Berkshire)


Gower, Sir Raymond
MacKay, John (Argyll &amp; Bute)


Grant, Sir Anthony
Maclean, David John


Greenway, Harry
McNair-Wilson, P. (New F'st)


Gregory, Conal
McQuarrie, Albert


Griffiths, E. (B'y St Edm'ds)
Madel, David


Griffiths, Peter (Portsm'th N)
Major, John


Grist, Ian
Malins, Humfrey


Ground, Patrick
Malone, Gerald


Grylls, Michael
Maples, John


Gummer, John Selwyn
Marland, Paul


Hamilton, Hon A. (Epsom)
Marlow, Antony


Hamilton, Neil (Tatton)
Maude, Hon Francis


Hampson, Dr Keith
Mawhinney, Dr Brian


Hanley, Jeremy
Maxwell-Hyslop, Robin


Hannam, John
Mellor, David


Hargreaves, Kenneth
Merchant, Piers


Harris, David
Meyer, Sir Anthony


Harvey, Robert
Miller, Hal (B'grove)


Haselhurst, Alan
Mills, Iain (Meriden)


Havers, Rt Hon Sir Michael
Mills, Sir Peter (West Devon)


Hawkins, C. (High Peak)
Miscampbell, Norman






Mitchell, David (NW Hants)
Smith, Sir Dudley (Warwick)


Moate, Roger
Smith, Tim (Beaconsfield)


Monro, Sir Hector
Soames, Hon Nicholas


Montgomery, Sir Fergus
Speller, Tony


Moore, John
Spence, John


Morris, M. (N'hampton, S)
Spencer, Derek


Morrison, Hon C. (Devizes)
Spicer, Jim (W Dorset)


Morrison, Hon P. (Chester)
Spicer, Michael (S Worcs)


Moynihan, Hon C.
Squire, Robin


Mudd, David
Stanbrook, Ivor


Murphy, Christopher
Stanley, John


Neale, Gerrard
Steen, Anthony


Needham, Richard
Stern, Michael


Nelson, Anthony
Stevens, Lewis (Nuneaton)


Neubert, Michael
Stevens, Martin (Fulham)


Newton, Tony
Stewart, Allan (Eastwood)


Nicholls, Patrick
Stewart, Andrew (Sherwood)


Normanton, Tom
Stewart, Ian (N Hertf'dshire)


Norris, Steven
Stokes, John


Onslow, Cranley
Stradling Thomas, J.


Oppenheim, Phillip
Sumberg, David


Oppenheim, Rt Hon Mrs S.
Taylor, John (Solihull)


Osborn, Sir John
Taylor, Teddy (S'end E)


Ottaway, Richard
Tebbit, Rt Hon Norman


Page, Richard (Herts SW)
Terlezki, Stefan


Parris, Matthew
Thatcher, Rt Hon Mrs M.


Patten, Christopher (Bath)
Thomas, Rt Hon Peter


Patten, J. (Oxf W &amp; Abdgn)
Thompson, Donald (Calder V)


Pattie, Geoffrey
Thompson, Patrick (N'ich N)


Pawsey, James
Thornton, Malcolm


Peacock, Mrs Elizabeth
Thurnham, Peter


Percival, Rt Hon Sir Ian
Townend, John (Bridlington)


Pollock, Alexander
Townsend, Cyril D. (B'heath)


Portillo, Michael
Tracey, Richard


Powell, William (Corby)
Trippier, David


Powley, John
Trotter, Neville


Prentice, Rt Hon Reg
Twinn, Dr Ian


Prior, Rt Hon James
van Straubenzee, Sir W.


Proctor, K. Harvey
Vaughan, Sir Gerard


Pym, Rt Hon Francis
Viggers, Peter


Raffan, Keith
Waddington, David


Raison, Rt Hon Timothy
Wakeham, Rt Hon John


Rathbone, Tim
Waldegrave, Hon William


Rees, Rt Hon Peter (Dover)
Walker, Bill (T'side N)


Renton, Tim
Walker, Rt Hon P. (W'cester)


Rhys Williams, Sir Brandon
Wall, Sir Patrick


Ridley, Rt Hon Nicholas
Waller, Gary


Ridsdale, Sir Julian
Walters, Dennis


Rifkind, Malcolm
Ward, John


Roberts, Wyn (Conwy)
Wardle, C. (Bexhill)


Robinson, Mark (N'port W)
Warren, Kenneth


Roe, Mrs Marion
Watson, John


Rossi, Sir Hugh
Watts, John


Rost, Peter
Wells, Bowen (Hertford)


Rowe, Andrew
Wells, Sir John (Maidstone)


Rumbold, Mrs Angela
Wheeler, John


Ryder, Richard
Whitney, Raymond


Sackville, Hon Thomas
Wilkinson, John


Sainsbury, Hon Timothy
Winterton, Mrs Ann


St. John-Stevas, Rt Hon N.
Winterton, Nicholas


Sayeed, Jonathan
Wolfson, Mark


Scott, Nicholas
Wood, Timothy


Shaw, Giles (Pudsey)
Woodcock, Michael


Shaw, Sir Michael (Scarb')
Yeo, Tim


Shelton, William (Streatham)
Young, Sir George (Acton)


Shepherd, Colin (Hereford)
Younger, Rt Hon George


Shepherd, Richard (Aldridge)



Shersby, Michael
Tellers for the Ayes:


Silvester, Fred
Mr. Carol Mather and


Sims, Roger
Mr. Robert Boscawen.


Skeet, T. H. H.



NOES


Abse, Leo
Atkinson, N. (Tottenham)


Adams, Allen (Paisley N)
Bagier, Gordon A. T.


Alton, David
Banks, Tony (Newham NW)


Anderson, Donald
Barnett, Guy


Archer, Rt Hon Peter
Barron, Kevin


Ashley, Rt Hon Jack
Beckett, Mrs Margaret


Ashton, Joe
Bell, Stuart





Benn, Tony
Hoyle, Douglas


Bennett, A. (Dent'n &amp; Red'sh)
Hughes, Dr. Mark (Durham)


Bermingham, Gerald
Hughes, Robert (Aberdeen N)


Bidwell, Sydney
Hughes, Roy (Newport East)


Blair, Anthony
Hughes, Sean (Knowsley S)


Boothroyd, Miss Betty
Hughes, Simon (Southwark)


Boyes, Roland
Janner, Hon Greville


Bray, Dr Jeremy
Jenkins, Rt Hon Roy (Hillh'd)


Brown, Gordon (D'f'mline E)
John, Brynmor


Brown, Hugh D. (Provan)
Johnston, Russell


Brown, N. (N'c'tle-u-Tyne E)
Jones, Barry (Alyn &amp; Deeside)


Brown, R. (N'c'tle-u-Tyne N)
Kaufman, Rt Hon Gerald


Brown, Ron (E'burgh, Leith)
Kennedy, Charles


Bruce, Malcolm
Kilroy-Silk, Robert


Buchan, Norman
Kirkwood, Archy


Caborn, Richard
Lambie, David


Callaghan, Rt Hon J.
Lamond, James


Callaghan, Jim (Heyw'd &amp; M)
Leadbitter, Ted


Campbell, Ian
Leighton, Ronald


Campbell-Savours, Dale
Lewis, Ron (Carlisle)


Canavan, Dennis
Lewis, Terence (Worsley)


Carlile, Alexander (Montg'y)
Litherland, Robert


Carter-Jones, Lewis
Lloyd, Tony (Stretford)


Clark, Dr David (S Shields)
Loyden, Edward


Clarke, Thomas
McCartney, Hugh


Clay, Robert
McCrea, Rev William


Clwyd, Mrs Ann
McDonald, Dr Oonagh


Cocks, Rt Hon M. (Bristol S.)
McKay, Allen (Penistone)


Cohen, Harry
Mackenzie, Rt Hon Gregor


Coleman, Donald
Maclennan, Robert


Concannon, Rt Hon J. D.
McNamara, Kevin


Conlan, Bernard
McTaggart, Robert


Cook, Frank (Stockton North)
McWilliam, John


Corbett, Robin
Madden, Max


Corbyn, Jeremy
Marek, DrJohn


Cowans, Harry
Marshall, David (Shettleston)


Cox, Thomas (Tooting)
Martin, Michael


Craigen, J. M.
Maxton, John


Crowther, Stan
Maynard, Miss Joan


Cunliffe, Lawrence
Meacher, Michael


Cunningham, Dr John
Meadowcroft, Michael


Davies, Rt Hon Denzil (L'lli)
Michie, William


Davies, Ronald (Caerphilly)
Mikardo, Ian


Davis, Terry (B'ham, H'ge H'l)
Millan, Rt Hon Bruce


Deakins, Eric
Miller, Dr M. S. (E Kilbride)


Dixon, Donald
Mitchell, Austin (G't Grimsby)


Dobson, Frank
Morris, Rt Hon A. (W'shawe)


Dormand, Jack
Morris, Rt Hon J. (Aberavon)


Dubs, Alfred
Nellist, David


Duffy, A. E. P.
Oakes, Rt Hon Gordon


Dunwoody, Hon Mrs G.
O'Brien, William


Eadie, Alex
O'Neill, Martin


Eastham, Ken
Orme, Rt Hon Stanley


Evans, John (St. Helens N)
Owen, Rt Hon Dr David


Ewing, Harry
Paisley, Rev Ian


Fatchett, Derek
Park, George


Field, Frank (Birkenhead)
Parry, Robert


Fields, T. (L'pool Broad Gn)
Patchett, Terry


Fisher, Mark
Pendry, Tom


Flannery, Martin
Penhaligon, David


Foot, Rt Hon Michael
Pike, Peter


Forrester, John
Powell, Raymond (Ogmore)


Foster, Derek
Prescott, John


Fraser, J. (Norwood)
Radice, Giles


Freeson, Rt Hon Reginald
Rees, Rt Hon M. (Leeds S)


Garrett, W. E.
Richardson, Ms Jo


Golding, John
Roberts, Ernest (Hackney N)


Gourlay, Harry
Robinson, P. (Belfast E)


Hamilton, James (M'well N)
Rogers, Allan


Hamilton, W. W. (Central Fife)
Rooker, J. W.


Hancock, Mr. Michael
Ross, Stephen (Isle of Wight)


Harrison, Rt Hon Walter
Rowlands, Ted


Hart, Rt Hon Dame Judith
Sheerman, Barry


Hattersley, Rt Hon Roy
Sheldon, Rt Hon R.


Haynes, Frank
Shore, Rt Hon Peter


Healey, Rt Hon Denis
Short, Mrs H.(W'hampt'n NE)


Heffer, Eric S.
Silkin, Rt Hon J.


Hogg, N. (C'nauld &amp; Kilsyth)
Skinner, Dennis


Holland, Stuart (Vauxhall)
Smith, C.(Isl'ton S &amp; F'bury)


Home Robertson, John
Smith, Cyril (Rochdale)






Smith, Rt Hon J. (M'kl'ds E)
Wallace, James


Soley, Clive
Wardell, Gareth (Gower)


Spearing, Nigel
Wareing, Robert


Steel, Rt Hon David
Weetch, Ken


Stewart, Rt Hon D. (W Isles)
Williams, Rt Hon A.


Stott, Roger
Wilson, Gordon


Straw, Jack
Winnick, David


Taylor, Rt Hon John David
Wrigglesworth, Ian


Thomas, Dafydd (Merioneth)
Young, David (Bolton SE)


Thomas, Dr R. (Carmarthen)



Thorne, Stan (Preston)
Tellers for the Noes:


Tinn, James
Mr. A. J. Beith and


Torney, Tom
Mr. John Cartwright.


Wainwright, R.

Question accordingly agreed to.

11. GAMING MACHINE LICENCE DUTY

Motion made, and Question,
That provision may be made extending to Northern Ireland the provisions of the Betting and Gaming Duties Act 1981 relating to gaming machine licence duty.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

12. VALUE ADDED TAX (NEWSPAPER ADVERTISEMENTS)

Motion made, and Question,
That, with respect to supplies made on or after 1st May 1985, Schedule 5 to the Value Added Tax Act 1983 shall have effect with the omission of Group 5 (newspaper advertisements).
This Resolution shall not authorise the making of amendments that would make value added tax chargeable at a rate other than either nil or the rate specificed in section 9 of the Value Added Tax Act 1983.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

13. INCOME TAX (CHARGE AND RATES FOR 1985–86)

Motion made, and Question,
That—
(1) Income tax for the year 1985–86 shall be charged at the basic rate of 30 per cent. and, in respect of so much of an individual's total income as exceeds £16,200 (the basic rate limit as determined under subsection (4) of section 24 of the Finance Act 1980—indexation), at such higher rates as are specified in the Table below (in which the higher rate bands are those as so determined):

TABLE


Higher rate bands
Higher rate


The first £3,000… … … … …
40 per cent.


The next £5,200… … … … …
45 per cent.


The next £7,900… … … … …
50 per cent.


The next £7,900… … … … …
55 per cent.


The remainder … … … … …
60 per cent.

(2) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 204 of the Income and Corporation Taxes Act 1970 (pay as you earn) before 18th May 1985.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

14. INCOME TAX (PERSONAL RELIEFS)

Motion made, and Question,
That—
(1) Section 24(5) of the Finance Act 1980 (increase of personal reliefs) shall not apply for the year 1985–86.

(2) In section 8 of the Income and Corporation Taxes Act 1970 (personal reliefs)—

(a) in subsection (1)(a) (married) for "£3,155" there shall be substituted "£3,455";
(b) in subsections (1)(b) (single) and (2) (wife's earned income relief) for "£2,005" there shall be substituted "£2,205";
(c) in subsection (1A) (age allowance) for "£3,955" and "£2,490" there shall be substituted "£4,255" and "£2,690" respectively; and
(d) in subsection (1B) (income limit for age allowance) for "£8,100" there shall be substituted "£8,800".

(3) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 204 of the Income and Corporation Taxes Act 1970 (pay as you earn) before 18th May 1985.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

15. RELIEF FOR INTEREST (LIMIT FOR 1985–86)

Motion made, and Question,
That, for the year 1985–86, the qualifying maximum referred to in paragraphs 5(1) and 24(3) of Schedule 1 to the Finance Act 1974 (limit on relief for interest on certain loans for the purchase or improvement of land) shall be £30,000.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968. —[Mr. Lawson]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

16. ADVANCE CORPORATION TAX (RATE FOR FINANCIAL YEAR 1985)

Motion made, and Question,
That the rate of advance corporation tax for the financial year 1985 shall be three-sevenths.—[Mr. Lawson]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

17. CAPITAL ALLOWANCES (MACHINERY AND PLANT)

Motion made, and Question,
That provision may be made with respect to allowances for machinery and plant under Chapter I of Part III of the Finance Act 1971.—[Mr. Lawson]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

18. CAPITAL ALLOWANCES (DREDGING, AGRICULTURAL LAND AND HOTELS)

Motion made, and Question,
That charges to income tax may be imposed by provisions—

(a) terminating initial allowances under section 67 of the Capital Allowances Act 1968 (dredging);
(b) terminating initial allowances and reducing writing-down allowances under section 68 of that Act (agricultural land and buildings); and
(c) terminating initial allowances in respect of capital expenditure incurred in respect of qualifying hotels, within the meaning of section 38 of the Finance Act 1978.—[Mr. Lawson]

put forthwith pursuant to Standing order No. 114 (Ways and Means motions), and agreed to.

19. CAPITAL ALLOWANCES (SCIENTIFIC RESEARCH)

Motion made, and Question,
That provision may be made with respect to allowances for capital expenditure on scientific research under Part II of the Capital Allowances Act 1968.—[Mr. Lawson]
put forthwith pursuant to Standing order No. 114 (Ways and Means motions), and agreed to.

20. INTEREST PAID ON DEPOSITS WITH BANKS ETC.

Motion made, and Question,
That provision may be made amending Schedule 8 to the Finance Act 1984.—[Mr. Lawson.]
put forthwith pursuant to Standing order No. 114 (Ways and Means motions), and agreed to.

21. SECURITIES

Motion made, and Question,
That charges to income tax, capital gains tax and corporation tax may be imposed by provisions about transactions occurring on or after 28th February 1985 in relation to securities.—[Mr. Lawson.]
put forthwith pursuant to Standing order No. 114 (Ways and Means motions), and agreed to.

22. FRIENDLY SOCIETIES

Motion made, and Question,
That provision may be made with respect to—

(a) the conditions to be fulfilled in order that friendly societies and branches thereof may be entitled to claim exemption from tax;
(b) the application of the limits on tax exempt business of friendly societies and branches thereof in relation to contracts for annuities made before 1st June 1984;
(c) the conditions under which policies issued by friendly societies and branches thereof on or after 19th March 1985, or issued before that date and varied on or after it, are to be regarded as qualifying policies within the meaning of Part I of Schedule 1 to the Income and Corporation Taxes Act 1970; and
(d) the application of Chapter III of Part XIV of the said Act of 1970 in relation to contracts for annuities entered into by friendly societies and branches thereof on or after 1st June 1984.—[Mr. Lawson.]

put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

23. OFFSHORE LIFE ASSURANCE

Motion made, and Question,
That provision may be made amending Part III of Schedule 15 to the Finance Act 1984.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

24. BUSINESS EXPANSION SCHEME

Motion made, and Question,
That provision may be made excluding property development, in certain circumstances, from the trades which are treated as qualifying trades for the purpose of Schedule 5 to the Finance Act 1983.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

25. PARTNERSHIPS (BASIS OF ASSESSMENT)

Motion made, and Question,
That provision may be made for altering the basis of assessment relating to partnerships.—[Mr. Lawson]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

26. LIMITED PARTNERS (RELIEFS)

Motion made, and Question,
That provision may be made with respect to reliefs from tax available to limited partners and persons in a similar position.—[Mr. Lawson]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

27. LONDON REGIONAL TRANSPORT

Motion made, and Question,
That in computing for the purposes of corporation tax the profit or loss of London Regional Transport for any accounting period beginning on or after 1st April 1985, the loss of the London Transport Executive for any earlier accounting period shall be computed as if section 16(1)(b) of the Finance Act 1970 had not been enacted.—[Mr. Lawson]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

28. VALUATION OF OIL (INCOME TAX AND CORPORATION TAX)

Motion made, and Question,
That provision be made, for the purposes of income tax and corporation tax, with respect to oil appropriated in certain circumstances to refining or to any use except production purposes of an oil field.—[Mr. Lawson]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

29. COMMODITY FUTURES, FINANCIAL FUTURES AND TRADED OPTIONS

Motion made, and Question,
That provision may be made for bringing gains on certain disposals of commodity futures, financial futures and traded options within the charge to capital gains tax or corporation tax on chargeable gains.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

30. CAPITAL GAINS (RETIREMENT RELIEF)

Motions made, and Question,
That provision may be made restricting the offices and employments which are relevant to the giving of relief from capital gains tax on the disposal by a person retiring from an office or employment of assets provided or held for the purposes of that office or employment.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

31. CAPITAL GAINS (SERIES OF TRANSACTIONS)

Motion made, and Question,
That charges to capital gains tax and corporation tax may be imposed by provisions relating to assets disposed of in a series of transactions.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

32. CAPITAL TRANSFER TAX (CONDITIONAL EXEMPTION)

Motion made, and Question,
That charges to capital transfer tax may be imposed by provisions relating to conditional exemption.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

33. STAMP DUTY (TAKEOVERS)

Motion made, and Question,
That the following provisions shall have effect for the period beginning 26th March 1985 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—
(1) Paragraph (2) below applies where a company (company A) issues relevant securities (but issues or transfers no other property) in exchange for shares in another company (company B) and company A—

(a) has control of company B, or
(b) will have such control in consequence of the exchange or of a general offer as a result of which the exchange is made.



(2) Stamp duty under the heading "Conveyance or Transfer on Sale" in Schedule 1 to the Stamp Act 1891 shall not be chargeable on an instrument transferring the shares in company B (by way of the exchange).
(3) Where paragraph (2) above would apply but for the fact that company A not only issues relevant securities but also issues or transfers other property (whether or not it is or includes money) by way of the exchange, the value of the relevant securities shall be ignored in calculating stamp duty under the heading mentioned in that paragraph on an instrument transferring the shares in company B (by way of the exchange).
(4) In this Resolution "securities" includes shares, and "relevant securities" means securities which may be registered in a register kept by or on behalf of company A and in relation to which the terms of the general offer or other arrangement providing for the exchange make no provision for partial or total conversion directly or indirectly into money (whether by way of redemption, sale or otherwise) at a time which falls or may fall before the expiry of the period of three years commencing with the day on which the exchange is completed.
(5) For the purposes of this Resolution relevant securities shall not be taken to have been issued unless they are registered in a register kept by or on behalf of company A, in the name of the person tranferring the shares in company B by way of the exchange.
(6) References in this Resolution to shares in company B include references to convertible loan capital of the company; and "convertible loan capital" means loan capital mentioned in section 126(2) of the Finance Act 1976.
(7) For the purposes of this Resolution company A has control of company B if company A has power to control company B's affairs by virtue of holding shares in, or possessing voting power in relation to, company B or any other body corporate.
(8) in this Resolution "general offer" means an offer made to members of company B or any class of them, and—

(a) includes an offer made with exceptions for persons connected with company A, but
(b) excludes an offer made with exceptions for persons who are not connected with Company A,

and a person is connected with a company if he would be so connected for the purposes of the Capital Gains Tax Act 1979.
(9) An instrument in respect of which stamp duty is not chargeable by virtue only of paragraph (2) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that paragraph or it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty.
(10) An instrument in respect of which reduced stamp duty is chargeable by virtue of paragraph (3) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that paragraph or it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is duly stamped.
(11) Paragraphs (1) to (10) above shall apply to—

(a) instruments executed on or after 26th March 1985, and
(b) instruments executed on or after 19th March 1985 which are stamped on or after 26th March 1985.

(12) For the purposes of section 14(4) of the Stamp Act 1891 (instruments not to be given in evidence etc. unless stamped in accordance with the law in force at the time of first execution), the law in force at the time of execution of an instrument falling within paragraph (11)(b) above shall be deemed to be that as varied in accordance with this Resolution.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973. — [Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

34. STAMP DUTY (VOLUNTARY WINDING UP: TRANSFER OF SHARS)

Motion made, and Question,
That the following provisions shall have effect for the period beginning 26th March 1985 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—

(1) Paragraph (2) below applies where a company is being wound up altogether voluntarily and there is an arrangement under section 287 of the Companies Act 1948 or section 257 of the Companies Act (Northern Ireland) 1960 whereby—

(a) its liquidator transfers to another company (company A) shares in a company (company B) which is a subsidiary of the company being wound up,
(b) company A issues relevant securities (but issues or transfers no other property) to the liquidator or a member or members of the company being wound up, and
(c) company A acquires control of company B (in consequence of the transfer of shares in company B).

(2) Stamp duty under the heading "Conveyance or Transfer on Sale" in Schedule 1 to the Stamp Act 1891 shall not be chargeable on an instrument transferring the shares in company B to company A.
(3) Where paragraph (2) above would apply but for the fact that company A not only issues relevant securities but also issues or transfers other property (whether or not it is or includes money) the value of the relevant securities shall be ignored in calculating stamp duty under the heading mentioned in that paragraph on an instrument transferring the shares in company B to company A.
(4) In this Resolution "securities" includes shares, and "relevant securities" means securities which may be registered in a register kept by or on behalf of company A and in relation to which the terms of the arrangement make no provision for partial or total conversion directly or indirectly into money (whether by way of redemption, sale or otherwise) at a time which falls or may fall before the expiry of the period of three years commencing with the day on which the arrangement is completed.
(5) For the purposes of this Resolution relevant securities shall not be taken to have been issued unless they are registered, in a register kept by or on behalf of company A, in the name of the liquidator or member concerned of the company being wound up.
(6) References in this Resolution to shares in company B include references to convertible loan capital of the company; and "convertible loan capital" means loan capital mentioned in section 126(2) of the Finance Act 1976.
(7) For the purposes of this Resolution company A has control of company B if company A has power to control company B's affairs by virtue of holding shares in, or possessing voting power in relation to, company B or any other body corporate.
(8) In this Resolution "subsidiary" has the same meaning as in the Companies Act 1948 or the Companies Act (Northern Ireland) 1960, as the case may be.
(9) An instrument in respect of which stamp duty is not chargeable by virtue only of paragraph (2) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that paragraph or it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is not chargeable with any duty.
(10) An instrument in respect of which reduced stamp duty is chargeable by virtue of paragraph (3) above shall not be taken to be duly stamped unless it is stamped with the duty to which it would be liable but for that paragraph or it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is duly stamped.
(11) Paragraph (1) to (10) above shall apply to—

(a) instruments executed on or after 26th March 1985, and
(b) instruments executed on or after 19th March 1985 which are stamped on or after 26th March 1985.

(12) For the purposes of section 14(4) of the Stamp Act 1891 (instruments not to be given in evidence etc. unless stamped in accordance with the law in force at the time of first execution), the law in force at the time of execution of an instrument falling within paragraph (11)(b) above shall be deemed to be that as varied in accordance with this Resolution.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973. — [Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

5. STAMP DUTY (GIFTS INTER VIVOS)

Motion made, and Question,
That the following provisions shall have effect for the period beginning 26th March 1985 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—
(1) The stamp duty chargeable by virtue of section 74 of the Finance (1909–10) Act 1910 (gifts inter vivos) is abolished.
(2) In section 58(7) of the Stamp Act 1891 (valuation by reference to value for purposes of section 74 of 1910 Act) for the words from "the value" to the end there shall be substituted "the value at any time of any property, that value shall be taken to be the price which the property might reasonably be expected to fetch on a sale at that time in the open market.
(3) An instrument—

(a) in respect of which stamp duty would be chargeable by virtue of section 74 of the 1910 Act apart from paragraph (1) above, and
(b) on which stamp duty is not chargeable under the heading "Conveyance or Transfer on Sale" in Schedule 1 to the Stamp Act 1891,

shall not be deemed to be duly stamped unless it has, in accordance with section 12 of the 1891 Act, been stamped with a particular stamp denoting that it is duly stamped or that it is not chargeable with any duty.
(4) Paragraphs (1) to (3) above shall apply to—

(a) instruments executed on or after 26th March 1985, and
(b) instruments executed on or after 19th March 1985 which are stamped on or after 26th March 1985.

(5) For the purposes of section 14(4) of the Stamp Act 1891 (instruments not to be given in evidence etc. unless stamped in accordance with the law in force at the time of first execution), the law in force at the time of execution of an instrument falling within paragraph (4)(b) above shall be deemed to be that as varied in accordance with this Resolution.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973 — [Mr. Lawson].
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

36. STAMP DUTY (TRANSFERS IN CONNECTION WITH DIVORCE ETC.)

Motion made, and Question,
That the following provisions shall have effect for the period beginning 26th March 1985 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—
(1) Stamp duty under the heading "Conveyance or Transfer on Sale" in Schedule 1 to the Stamp Act 1891 shall not be chargeable on an instrument by which property is conveyed or transferred from one party to a marriage to the other if the instrument—

(a) is executed in pursuance of an order of a court made on granting in respect of the parties a decree of divorce, nullity of marriage or judicial separation, or
(b) is executed in pursuance of an order of a court which is made in connection with the dissolution or annulment of the marriage or the parties' judicial separation and which is made at any time after the granting of such a decree, or
(c) is executed at any time in pursuance of an agreement of the parties made in contemplation of or otherwise in connection with the dissolution or annulment of the marriage or their judicial separation.

(2) An instrument in respect of which stamp duty is not chargeable under the heading mentioned in paragraph (1) above by virtue of that paragraph shall be chargeable under the paragraph with stamp duty of 50p.
(3) Paragraphs (1) and (2) above shall apply to instruments executed on or after 26th March 1985.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973. — [Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

37. STAMP DUTY (DEATH: VARYING DISPOSIIONS, AND APPROPRIATIONS)

Motion made, and Question,
That the following provisions shall have effect for the period beginning 26th March 1985 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—
(1) Where, within the period of two years after a person's death, any of the dispositions (whether effected by will, under the law relating to intestacy or otherwise) of the property of which he was competent to dispose are varied by an instrument executed by the persons or any of the persons who benefit or would benefit under the dispositions, stamp duty under the heading "Conveyance or Transfer on Sale" in Schedule 1 to the Stamp Act 1891 shall not be chargeable on the instrument.
(2) Paragraph (1) above does not apply where the variation is made for any consideration in money or money's worth other than consideration consisting of the making of a variation in respect of another of the dispositions.
(3) Paragraph (1) above applies whether or not the administration of the estate is complete or the property has been distributed in accordance with the original dispositions.
(4) Where property is appropriated by a personal representative in or towards satisfaction of a general legacy of money, stamp duty under the heading mentioned in paragraph (1) above shall not be chargeable on an instrument giving effect to the appropriation.
(5) An instrument in respect of which stamp duty is not chargeable under the heading mentioned in paragraph (1) above by virtue only of paragraph (1) or (4) above shall be chargeable under this paragraph with stamp duty of 50p.
(6) But an instrument which is chargeable under paragraph (5) above shall not be treated as duly stamped unless it has, in accordance with section 12 of the Stamp Act 1891, been stamped with a particular stamp denoting that it is duly stamped.
(7) Paragraphs (1) to (6) above shall apply to instruments executed on or after 26th March 1985.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973. — [Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

38. STAMP DUTY (REPEAL OF CERTAIN FIXED DUTIES)

Motion made, and Question,
That the following provisions shall have effect for the period beginning 26th March 1985 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—
(1) The following headings specified in Schedule 1 to the Stamp Act 1891 shall be omitted—

(a) The heading beginning "Agreement or contract made or entered into pursuant to the Highways Acts".
(b) The headings beginning "Appointment of a new trustee, and appointment in execution of a power of any property".
(c) The heading beginning "Charter of resignation".
(d) The heading beginning "Covenant. Any separate deed of covenant".
(e) The heading "Deed of any kind whatsoever, not described in this schedule".
(f) The heading beginning "Letter of allotment and letter of renunciation" and "Scrip certificate, scrip".
(g) The heading beginning "Letter or power of attorney, and commission, factory, mandate".
(h) The heading beginning "Precept of Clare constat".
(i) The heading "Procuration, deed, or other instrument of'.


(j) The heading beginning "Resignation", together with the heading "instrument of resignation of any lands or other heritable subjects in Scotland not of burgage tenure".
(k) The heading "Revocation of any use or trust of any property by any writing, not being a will".
(l) The heading beginning "Seisin" and the heading "Notarial instrument to be expeded and recorded in any register of sasines".
(m) The heading "Warrant of attorney of any other kind".
(n) The heading beginning "Writ".

(2) In section 7 of the Finance Act 1907 (stamping of hire-purchase agreements) for the words from "shall only be charged" to the end there shall be substituted "shall not be charged with any stamp duty".
(3) Paragraphs (1) and (2) above shall apply to—

(a) instruments executed on or after 26th March 1985, and
(b) instruments executed on or after 19th March 1985 which are not stamped before 26th March 1985.

(4) For the purposes of section 14(4) of the Stamp Act 1891 (instruments not to be given in evidence etc. unless stamped in accordance with the law in force at the time of first execution), the law in force at the time of execution of an instrument falling within paragraph (3)(b) above shall be deemed to be that as varied in accordance with this Resolution.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973. — [Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

39. STAMP DUTY (ABOLITION OF DUTY ON CONTRACT NOTES)

Motion made, and Question,
That the following provisions shall have effect for the period beginning 26th March 1985 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—
(1) Subsections (1) and (2) of section 77 of the Finance (1909–10) Act 1910 (duty on contract notes) shall cease to have effect.
(2) Paragraph (1) above shall apply to contract notes made and executed on or after 26th March 1985.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973. — [Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

40. STAMP DUTY (EXCHANGE RATES)

Motion made, and Question,
That provision may be made for the application to certain instruments of section 6 of the Stamp Act 1891 instead of section 12 of the Finance Act 1899.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

41. OIL TAXATION (LIMIT ON TAX PAYABLE)

Motion made, and Question,
That provision may be made with respect to the chargeable periods which are relevant for the purposes of section 9(1) of the Oil Taxation Act 1975.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

42. OIL TAXATION (EXPLORATION AND APPRAISAL EXPENDITURE)

Motion made, and Question,
That provision may be made limiting expenditure qualifying for relief under section 5A of the Oil Taxation Act 1975—

(a) by restricting the areas relevant to subsection (2) of that section; and
(b) by treating certain expenditure as reduced by the value of oil won in the course of operations to which the expenditure relates.—[Mr. Lawson.]

put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

43. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHRGES)

Motion made, and Question,
That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having restrospective effect) which may arise from provisions designed in general to afford relief from tax.—[Mr. Lawson.]
put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

PROCEDURE RESOLUTION

Motion made, and Question,
That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year—

(a) provisions with respect to the deduction of tax from interest on certain loans;
(b) provisions with respect to allowances under Chapters IV and V of Part I of the Capital Allowances Act 1968 (dredging and agricultural land and buildings);
(c) provisions amending section 343 of the Income and Corporation Taxes Act 1970 (building societies);
(d) provisions with respect to allowances under Chapter I of Part XIV of the Income and Corporation Taxes Act 1970 (patents and know-how);
(e) provisions with respect to allowances and charges under Chapter I of Part III of the Finance Act 1971 (machinery and plant);
(f) provisions with respect to initial allowances in respect of expenditure on qualifying hotels, within the meaning of section 38 of the Finance Act 1978; and
(g) provisions amending section 56 of the Finance Act 1978 (capital receipts in respect of shares subject to approved profit sharing schemes).

put forthwith pursuant to Standing Order No. 114 (Ways and Means motions), and agreed to.

Bill ordered to be brought in upon the foregoing resolutions by the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Secretary Sir Geoffrey Howe, Mr. Secretary Jenkin, Mr. Secretary Tebbit, Mr. Secretary King, Mr. Secretary Ridley, Mr. Michael Jopling, Mr. Peter Rees, Mr. John Moore, Mr. Barney Hayhoe, and Mr. Ian Stewart.

FINANCE

Bill to grant certain duties, to alter other duties and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance, presented accordingly by Mr. John Moore and read the First time; to be read a Second time tomorrow and to be printed. [Bill 111.]

National Health Service (Charges)

Mr. Michael Meacher: I beg to move,
That an humble Address be presented to Her Majesty, praying that the National Health Service (Charges for Drugs and Appliances) Amendment Regulations 1985 (S.I., 1985, No. 326), dated 5th March 1985, a copy of which was laid before this House on 11th March, be annulled.

Mr. Speaker: It will be for the convenience of the House also to discuss the following motions:
That an humble Address be presented to Her Majesty, praying that the National Health Service (Dental Charges—Variation) Regulations 1985 (S.I., 1985, No. 352), dated 7th March 1985, a copy of which was laid before this House on 11th March, be annulled.
That an humble Address be presented to Her Majesty, praying that the National Health Service (Charges for Drugs and Appliances) (Scotland) Amendment Regulations 1985 (S.I., 1985, No. 353), dated 7th March 1985, a copy of which was laid before this House on 11th March, be annulled.
That an humble Address be presented to Her Majesty, praying that the National Health Service (Increase of Dental Charges) (Scotland) Regulations 1985 (S.I., 1985, No. 354), dated 7th March 1985, a copy of which was laid before this House on 11th March, be annulled.
That an humble Address be presented to Her Majesty, praying that the National Health Service (Charges to Overseas Visitors) Amendment Regulations 1985 (S.I., 1985, No. 371), dated 11th March 1985, a copy of which was laid before this House on 11th March, be annulled.

Mr. Meacher: Before I come to the substance of this matter, I wish to register a strong protest at the manner in which the motions have been handled by the Government. They know that it is an issue of acute public interest and that the £2 prescription charge is an exceedingly unpopular move, so they are trying to smuggle through the orders at a time of maximum distraction by the Budget debate as late at night as possible.
I can give Ministers the assurance that they may control the business management of the House and manipulate it to their purpose, but they will not and cannot stop this issue from being raised on every platform throughout the country as an election issue. It may be that at the next election it is a £3 prescription charge.
We reject these orders first and foremost because, in conjunction with other Government policies now being unveiled, they represent — if they have not already reached this point — a final, decisive break with the principle so valued by the people of this country of an NHS free at the point of service for all who need it, irrespective of income, class, age and gender.
That principle is being smashed this year by a combination of a £2 prescription charge—which is no longer marginal but which is a real, onerous and damaging tax on the sick—a limited list which will, for the first time for thousands of people previously protected in exempt categories, mean that they will pay through the nose for the drugs they need, and a general practitioner voucher scheme now being examined by the DHSS— however much the Secretary of State may ignore it—that will privatise general practice in this country on the American pattern.
I warn the Government that all three measures are bitterly resented by the people of this country who want none of Reagan's health care here and have no intention

of returning to poor law medicine when money, vouchers and means tests — not medical needs — determined treatment. We object to the orders—

Mr. Tony Baldry: Did not the Labour Government introduce prescription charges in legislation immediately after the last war?

Mr. Meacher: Prescription charges in 1951, when the Labour Government left office, were a minuscule fraction of what they are today. The majority of people in this country would like to return to that level of charge rather then the current £2.
We object to the orders because a 10–fold increase in prescription charges is as harsh and vindictive a symbol of six years of Thatcherite Government as is the trebling of unemployment. It cannot be justified by the actual rise in the cost of drugs. The great majority of drugs prescribed have not shown excessive cost increases, and some have actually become cheaper per unit to the NHS since the mid–1970s. Increased prescription charges cannot be justified in terms of there being no alternative sources of income within the health budget, which the Secretary of State likes to pretend is the excuse.
I shall mention one other single item. How can the Secretary of State—Mr. 1,000 per cent., as we should no doubt dub him—explain putting up charges 10–fold for poor people as well as the better off when his Department this year will still hand out £135 million in tax relief, paid for by the same taxpayers, for the promotional expenses of the drugs companies when, under this Government, they have already had a guaranteed rate of profit of up to 21 per cent.? How can that possibly be justified? I will give way to the Secretary of State if he wishes to answer that question.
This huge prescription charge hype—which this year is five times the annual rate of inflation — can be justified only by the Government's obsession with markets and privatisation and their craven determination to undermine the principles of a National Health Service built on Socialist lines and designed to override the inequalities and injustices of market forces.
But even the Government have gone over the top this time because, according to a parliamentary answer on 16 November 1984, a half of all prescriptions dispensed have a net ingredient cost of below £2. That must mean that millions of people will be forced this year to pay more for their prescriptions than it costs the NHS to dispense them. Patients are being forced to subsidise the NHS in exactly the same way as council tenants are being forced to subsidise the rates through their rents continually being hyped up under the Conservatives. The same principle is being operated, pushing up charges to the point where there is forced distribution from the poor to the better off.

Mr. Tim Eggar: As the cost of prescription charges makes the same contribution to the NHS budget as it did in 1968, when the then Labour Government reintroduced prescription charges, will the hon. Gentleman confirm that the criticism that he is levelling at the present Government would have been levelled by him at that Labour Government in 1968?

Mr. Meacher: The hon. Gentleman's figures are not quite correct — [Interruption.] — but I object to prescription and other charges forming anything like the proportion of total NHS expenditure that they will this


year, and that is the case whatever the Government in power. I wish to be in a Government who will wind down, rather than push up, prescription charges as a proportion of NHS revenue.

Mr. Charles Kennedy: If the hon. Gentleman were now the Secretary of State, given the present economic conditions, at what level would he fix prescription charges?

Mr. Meacher: I would want them to be much lower than £2. It will be one of the priorities of our manifesto to reduce prescription charges to well below that level. I give that assurance to the people of Britain, though no doubt, by the time of the next election, the charge will not be £2. Indeed, perhaps the Secretary of State would care to say what the charge will be in 1987–88, it having increased 10 times in six years. By that time a prescription will cost between £3 and £4.

Mr. Tim Yeo: rose—

Mr. Meacher: I will not give way. This is a short debate and I hope that the hon. Gentleman has an opportunity to take part.
The Secretary of State's justification for the increase when he made his statement on 11 March was that extra revenue for the NHS had to come from somewhere. That was his only excuse. There was no alternative, he claimed,but to increase charges. He said:
If we want to see more resources going to the health service, charges must make a contribution to that growth."—[Official Report, 11 March 1985; Vol. 75, c. 22.]
I am glad that the Secretary of State nods his assent. Of course, that statement is untrue. The Government have said that the increase in revenue from all the increased NHS charges this year will be £40 million. A week ago the Chancellor of the Exchequer handed out, predominantly to the rich and better off, £155 million through further concessions in drawing the teeth of capital gains tax and a further £50 million from the abolition of development land tax. I shall give another example of where alternative revenue could come from if only the Government had half a mind to look elsewhere. Ten days ago The Times carried this story on its front page:
It has been estimated that defence contractors made a windfall excess profit of up to £360 million between 1980 and last year because the old 20 per cent. profit rate had been set too high by an independent review board and because the Government had refused to make a unilateral reduction in the rate.
That means that the Government are ready to insist on screwing an extra £40 million out of sick patients but decline to take back from defence contractors a sum that is nine times that figure in excess profits clawed out of the Ministry of Defence by some of the most lucrative contracts in the country.

Mr. Jerry Hayes: rose—

Mr. Meacher: No, I shall not give way. The hon. Gentleman must seek to make his own speech. If the Government want an example of alternative revenue from within the NHS, the Minister should look no further than his own recent audit of private medicine abuses. I am glad that the Minister nods. His Department audited only one sixth of the district health authorities in England and Wales. It found corruption in private practice that was cheating the NHS of about £10 million a year. If he were now to audit — I should like to know why he is not

doing this — the other five sixths of the health authorities, he could save far more for the NHS by making defrauding consultants, rather than sick patients, pay.
The principle of a comprehensive dental service that is free for all has virtually collapsed. Charges have escalated so far over the past six years that after 1 April patients will be obliged to pay an average contribution of about 60 per cent. of the full cost of their dental fees. The damaging features of the latest round of swingeing increases in dental charges and the real risk that they will deter people from seeking treatment and that their manner is such that they offer a price incentive to removing teeth rather than dentists seeking to preserve natural teeth, and that is not desirable.
How much better it would be if instead of there being a tax on dental health the Government attacked the causes of dental disease and not treatment. The Government are already taxing cigarettes and alcohol heavily and surely they should now be taxing sugar. That would be a far better alternative to this attack on dental health.
These huge increases in NHS charges are wrong, unpopular and unnecessary. There are far better ways of raising the money if the Government really need it.

Mrs. Edwina Currie: rose—

Mr. Meacher: No, I shall not give way. These increases are a harsh and damaging tax on the sick. They will hit hardest some of the poorest and most vulnerable in our society. We reject them; we shall vote against them; we shall campaign against them and in the end we shall repeal them.

The Minister for Health (Mr. Kenneth Clarke): Five sets of regulations are being taken together. They have one point in common—they all raise revenue for the NHS. We make no apologies for raising revenue for patient services in the NHS. The hon. Member for Oldham, West (Mr. Meacher), in trying to explain his position got himself into total confusion about from where he would or would not raise revenue and his attitude towards the NHS.
The hon. Member for Oldham, West began with a ringing declaration on behalf of the National Health Service, committing himself and his party to a free service that was free at the point of delivering treatment, and so on. We would all subscribe to his declaration. He went on, however, to remind us of some of his actions in the House during the past few weeks. He was, once more, against a selective list of drugs. He said that he would deprive the Health Service of £75 million of savings which can be devoted to patient care. The hon. Gentleman is against the charges that are raised in these regulations. He is therefore, against another £70 million of revenue being raised for the Health Service, which it can spend on developing these services. His only suggestion for compensating the Health Service for this loss of income, which would undoubtedly lead to cuts in services, was to introduce taxes on food with a tax on sugar.
We are putting forward the proposals for one reason only—because we support the NHS and think that it is legitimate to carry on raising extra revenue for patient services so long as the revenue is raised from those who can afford to make a reasonable contribution.

Mrs. Jill Knight: Did my right hon. and learned Friend notice that the hon. Member


for Oldham, West (Mr. Meacher) said that he believed in this service being free for all, irrespective of income? Would that mean that a considerable number of extremely wealthy people who are well able to pay for what they need would be able to get free dental health services?

Mr. Clarke: It would mean that. The hon. Member for Oldham, West was totally irrational from the beginning to the end of his speech, as the Labour party has been irrational in its approach to a charging policy in the Health Service ever since it introduced charges in 1951. Since then, from time to time, the Labour party has promised to abolish those charges. The Labour Government abolished charges once, and then reintroduced them. The Labour Government froze the level of charges but did not abolish them the last time they were in power. It is unfortunate that we have go through this annual ritual as Labour spokesmen try to produce something that could be called a credible policy.
We make no apologies for raising revenue in this way, because we believe that we are raising only a modest contribution towards treatment from those who can afford to pay. Of course, many of them may not want to pay. Many of us do not like to pay for services that might otherwise be free. We have been concerned to ensure that no one in need is denied necessary treatment on financial grounds.
All of the pleas of the hon. Member for Oldham, West about the burden on the poor or the deterrents to treatment founder on the fact that we maintain the wide-ranging arrangement for exemption and remission which we inherited from the Labour Government when they instated the present pattern of charges. The result is that 72 per cent. of prescription items are dispensed free with a further 6 per cent. going to the holders of prepayment certificates. We are talking about the 22 per cent. of prescriptions paid for by those who can afford to make a modest contribution.

Mr. Tony Favell: My right hon. and learned Friend has raised an important point. During the debate on the Budget, we heard from the Opposition nothing but bleatings that those who can afford to pay should pay. Now we hear the opposite—those who can afford to pay should not pay. How on earth can my right hon. and learned Friend explain this?

Mr. Clarke: I agree. It is axiomatic that the votes that the Opposition will cast tonight will mainly benefit people above the incomes level of those who at the moment are entitled to exemption. The Opposition are about to cast a vote on behalf of the better off, against the NHS depriving the Health Service of revenue and putting £2 a time into the pockets of those who do not qualify for exemption.
Because the charges that we raise are from a comparatively small proportion of the population, they make only a modest contribution to the funding of the Health Service. That revenue will account for only 3·2 per cent. of total Health Service spending in the 1985–86 financial year. My hon. Friend was right when he said that in the last year of the Wilson Government, in 1969–70, the then Labour Government raised 3·5 per cent of the income of the Health Service from charges, and relied more on charges than we do.

Mr. Meacher: Why bother?

Mr. Clarke: The modest percentage that we are talking about will amount to £460 million worth of the income of the National Health Service, and that is the scale of the sum that the hon. Gentleman would sweep away if it remains his policy, which was quite obscure, that somehow a Labour Government will give that income altogether.

Mr. Meacher: Before the right hon. and learned Gentleman seeks to make capital out of the intervention of his hon. Friend the Member for Stockport (Mr. Favell), let me quote from the Central Statistical Office series "National Income and Expenditure 1983" which states that in 1968–69 the proportion of NHS revenue coming from charges was 3·1 per cent. According to the same series, in 1982–83, the figure was 6·2 per cent. — exactly double.

Mr. Clarke: I was talking about the last year of that Labour Government — 1969–70—when the figure was 3·5 per cent. That was a higher proportion than the 3·2 per cent. for which our charges will account.

Mr. Meacher: That is right—3·5 per cent. Only half of what it is now.

Mr. Clarke: I am amazed that we agree on a figure. I am used to Meacherite figures from documents. If the hon. Gentleman looks at the right year, he will find that the proportion was higher.

Mr. Robert C. Brown: I accept that it was a regrettable step years ago when the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) —now a Social Democrat—who was our Chancellor of the Exchequer, introduced prescription charges. However, the Minister is now defending the Prime Minister, who said that the Government had no intention of increasing prescription charges. We are now in the £2 ball game, but prescriptions charges were 10p when the right hon. Lady made that statement. Is the Minister aware that two elderly constituents of mine, who came to see me at the weekend, will have to pay for prescriptions for a drug that they have been taking for 35 years?

Mr. Deputy Speaker (Mr. Harold Walker): Order. Interventions should be brief.

Mr. Clarke: I am sure that there were tears in the hon. Gentleman's eyes as he walked through the Division Lobby to support the reintroduction of prescription charges in 1968–69, and that he was even more distressed when he voted again to put them up the following year, and even more distressed when he failed to vote for their abolition at any time when the Labour party got back into power. The fact is that we are now relying on them to a lesser extent than the Government of whom he was a supporter, if not a member, in the late 1970s.
Let me tell the hon. Gentleman exactly what my right hon. Friend the Prime Minister said at a press conference on 24 May 1983 during the general election campaign. She said:
No responsible Government, no responsible Opposition, no responsible politician could rule out the possibility that prescription charges will rise. So I wouldn't dream of ruling it out.
My right hon. Friend has never at any stage pledged us to the abolition of prescription charges, and she would not dream of doing so now.
I should like to deal with the meat of the regulations. I shall not spend time reminding the Opposition—they


do not like to be reminded—that the Government are spending more on the NHS than ever before, and certainly far more than the last Labour Government or any Labour Government. Our spending is now double in cash terms what it was when we took office. It is 20 per cent. more in real terms, over and above the movement in prices, than was spent by the Labour Government. Therefore, in putting forward the charges, we are merely supporting a policy of increased spending on patient services in the NHS, and that is the only basis on which they are put forward. Increasing the basic charge from £1·60 to £2 will bring in an extra £19 million, from those who can afford it, to help offset the cost of the drugs bill, which now stands at £1·5 billion a year.
The hon. Member for Oldham, West compared the £2 prescription charge with the cost of some of the prescriptions that are dispensed. Of course, a flat rate charge, which is not related to the cost of prescriptions, will mean that the charge is rather more than the cost of some prescriptions and less than the cost of others. That has always been the case. The average prescription will cost about £4.50 next year, so we are imposing a charge that represents well under half of the average total cost of a prescription item. As I have said, 72 per cent. of prescriptions are dispensed free in any event, and we are not changing the exemption arrangements.
The cost of the prepayment certificates has also increased — four monthly ones from £8.50 to £11 and annual ones from £24 to £30.50. They are excellent value for those who think that they will require frequent prescriptions but are not exempt. They help to meet the problems that can arise for those who need frequent medication.
We have made a small concession, the need for which was impressed on us by hon. Members on both sides of the House. If, in future, someone takes out a season ticket — the prepayments certificate — but finds within one month that he is exempt, or if, unfortunately, the patient dies, the cost of the ticket will be reimbursed. It is not a big change, but it shows that we continue to try to be sensitive to the problems that arise for some people when paying prescription charges.
The hon. Member for Oldham, West said that the new charges would have a deterrent effect on people seeking drugs. He and his predecessors have said that every year as we have steadily taken prescription charges back to a reasonable level. That assertion does not square with experience or the facts in any year. The number of prescription items dispensed has increased from 300 million in 1979 to an estimated 320 million in 1984, and I do not expect it to drop in 1985 after these increases. There are fluctuations, but there is no deterrent effect because the charges are imposed only on those who can afford to pay.
I tried to follow what the hon. Member for Oldham, West said when he attempted to put together an argument suggesting that certain types of treatment are now more financially advantageous. I find it hard to take seriously anything that the hon. Gentleman says on this subject. When he last discussed this matter he claimed that more than 90 per cent. of people have to pay the maximum charge when they visit the dentist. In 1983–84, about 85,000 courses of treatment attracted the maximum charge out of a total of more than 30 million. That represents less than 0·3 per cent. The hon. Gentleman's statistics on dental charges are more unreliable than his usual

Meacherite statistics. Perhaps he was referring to the routine treatment maximum which we raised from £14.50—

Mr. Meacher: Yes.

Mr. Clarke: He is wrong there, because more than 9 million courses of treatment consist of treatment for which no charge can be levied. That is 30 per cent. of the total. Of the remainder, 46 per cent. are provided free. That means that about 60 per cent. of people pay nothing when they visit the dentist.
Of the remaining courses, for which people pay, about half attract a charge of less than £14·50. There will be no increase in that charge, because such patients are already paying the full cost. The regulations therefore relate to about 20 per cent. only of all visits to the dentist. That is the proportion affected by the changes in the regulations. The increases in many of the charges are modest. The main change is in the charge for routine treatment, such as fillings, scaling, X-rays, extractions, and periodontal and endodontic treatment, where the total cost of the treatment is more than £14·50. I shall describe the effect of the only significant change that we are making after I have given way.

Mr. Norman Buchan: The right hon. and learned Gentleman mentioned one third of 1 per cent., over 60 per cent. free and only 20 per cent. paying, but why in heaven's name is anything being charged? It sounds as though it would he much cheaper if it were all free.

Mr. Clarke: The hon. Gentleman successfully identifies the dilemma which faces the Opposition. We are raising a perfectly worthwhile sum, which will be spent by those who provide the services of the NHS, but only from a comparatively small section of the population who can afford to make the payments. That is why the Opposition's obsession with how we are persecuting the poor and driving down the level of treatment is consistently contradicted by the facts of what happens each year after we make the changes.
The main change is to routine treatments which cost more than £14·50. I agree that the change being made is a little complicated, but it is a step towards a fairer system of charging for patients who pay. We are raising to £17 the level to which patients must pay the full cost of their treatment. Patients will pay 100 per cent. of the cost up to £17, unless they are exempt. Above that level, patients will now pay 40 per cent. of the extra cost. That means that instead of a sharp cut-off at £17, the charge will be related to the cost of the treatment. That is the only significant change in dental charges. It moves a step towards a fairer system. The increases produced will be modest, and in two thirds of the cases affected by the change the increase will be less than £10.
Hon. Members argue that increases in charges deter people from visiting the dentist. That is contradicted by all experience. Nevertheless the Opposition repeat that claim year in, year out. The number of courses of dental treatment has continued to increase from 28·5 million in 1979 to 32·6 million last year. After the increases last year, which the Opposition vigorously opposed the increase in the total number of treatments appears to have been about 1·6 per cent. The deterrent effect of which Opposition Members talk is not borne out in practice; nor will it be next year.

Mrs. Renée Short: According to figures issued by the British Dental Association, the cost of having a back tooth root filled will increase to about £36. Under the scheme, if a patient has some exemptions, it can cost £25. Does the Minister not see that the difference between the high cost of having one tooth filled and the cost of having it extracted, which is just more than £3, will not improve dental care for patients who cannot afford to pay the filling charges? They would prefer to have their teeth pulled out.

Mr. Clarke: The change will produce a larger than average increase in the cost of certain routine treatments for which we are moving towards getting charges more closely related to the actual cost of the treatment received. That is fairer between patients. The comparison that the hon. Lady makes has always been the case. The system of dental charges always made it much cheaper to have teeth extracted but, as she knows, in modern dental practice people do not opt to have a tooth extracted if it can be saved. Experience shows that they are increasingly prepared to pay a modest charge to have a tooth saved. Those who cannot afford it and who would be driven by financial extremes to have a tooth extracted which could be saved are protected by the low income exemptions. All who are adversely affected financially have a free choice, because they are exempt from charges.
Finally, I shall deal with overseas visitors' charges, of which less has been made this year. We have raised their charges in line with the new charges for private patients. The hon. Member for Oldham, West wisely did not complain about the level of the increase, because he no doubt approves of the fact that we have increased the charges of private patients in the NHS by about 14 per cent., although the actual rate varies according to the type of hospital.
For the first time, we have improved on the system that we inherited from the previous Labour Government in yet another way, by taking into account capital costs and administrative costs in setting these charges. The overseas visitors charges must match that. I hope that no hon. Member will claim that the overseas visitors charges are discriminatory and racialist; they replace more discriminatory provisions that existed before, and they raise income from visitors who come from countries which charge British patients who visit those countries. We had only six complaints about the system in 1983, and we investigated them all. We are raising about £2 million each year from those charges, which is a worthwhile contribution to the service.

Mr. Max Madden: The Minister said that the charges raise £2 million. Can he tell us what the net profit from those charges is?

Mr. Clarke: We always thought that the administrative costs would be insignificant. Although it is obviously not a net income of £2 million, it is undoubtedly a substantial income to the service. The problems that were allegedly going to occur on the administrative front have not occurred in practice, so far as we are aware.
We are raising the charges, plus the private patients charges, to a reasonable level which we believe can be withstood by patients without deterring anyone from treatment. The effect is that we contribute to our increased

spending on the National Health Service. We maintain the exemption arrangements to ensure that the increases do not adversely affect the poor.
We have this debate annually. It is probably as well that it is taken late at night to spare the embarrassment of Labour Members, whose protestations become stranger each year. I hope that by the time we end the debate tonight, the hon. Member for Oldham, West will be a little clearer about the Labour party's policy this year, what the charges would be if the Labour party were in power, and what they might be if it returned to power, the hon. Gentleman said that the Labour party would wind down the charges raised by the service. He would wind down £460 million worth of income to the service if he did so. He may believe that he could take credit for that, just as he may believe that he could take credit for the fact that the Labour Government did not abolish or increase charges, but froze them for their entire period of office. We increased them 10 times because we inherited them at such an artificially low level.
When the Labour Government came to office, they were completely uncertain about what to do, but their decision was foolish and irresponsible. It was a bad decision, taken for politically expedient reasons at the expense of the National Health Service. Did they believe that the NHS did not need the money? It did, if one considers how little they spent on the service compared with what we are spending on it now. Did they believe that the Health Service needed a little money, but not much more, when they maintained the level of charges? Of course, they did not. They were impaled on the horns of a ludicrous political commitment which they knew they could not afford, but to which they clung at the expense of the Health Service. As a result, they deprived it of revenue.
We believe that we should collect all the income that we can reasonably expect to be collected by the National Health Service for the National Health Service. We shall be rigorous in collecting it from private practice. We deplore abuses and lax financial control, and we have taken steps to prevent them. The hon. Member for Oldham, West draws on what we are doing to collect income from private practice to augment his speech. We collect income from private practice, from dental charges, from prescription charges, from overseas visitors and from road traffic accident charges, because we believe that the system is reasonably fair. It exempts the poor and those who cannot pay, and it raises money for an extremely good service that can put it to the benefit of patients.
A vote against the regulations is a vote against the service, unless and until the Labour party can explain from where on earth it will get the money to maintain patient care.

Mr. Willie W. Hamilton: We are used to the repetitious speeches of the Minister for Health on the Health Service, but the fact is that the people of the country do not believe that the Government are doing other than decimating the Health Service. I have said before in the House—and I repeat—that the evidence is there for everyone to see.
Tonight, we are debating three further stages in the dismantling of, and the attack on, the fundamental principles on which the Health Service is based. First, the optical services will be dismantled in a few days' time.


The right hon. and learned Gentleman did not mention that, and it may not be strictly relevant to the debate, but only children under 16, students under 19 and those on supplementary benefit, family income supplement, or other low incomes, will, from 1 April, be eligible for NHS glasses. Everybody else will be paying for their glasses, but through the private system of profiteering—or, as the Government call it, competition. If anybody believes that that will lead to reduced prices, he had better think again. They will have a rude shock when they go to pay for their glasses.
Secondly, GPs will no longer be able to prescribe certain drugs on the NHS. We have already been round this course. Only a limited number of generic drugs will be available to treat certain conditions. Some of the drugs will be available over the counter, but elderly people, children and low income families now exempt from NHS prescription charges will have to pay. The latest figure for the Government's estimate of the savings from this is £75 million. I doubt whether that will be achieved.
The main attack is the health charges that we are discussing. After six years of Tory government, in which they say that the nation has progressed, we have had growth and they are on course with their successful economic policies, they have succeeded for the first time in British history in giving us the £2 gallon of petrol and the £2 per item Health Service prescription charge. That is the measure of their success. They may say that they are doing this because they believe that, where possible, people should pay for the service that they get, as that is the gist of the Government's argument not only in health but in other sectors.
The Government always come up with the claim that 70 per cent. are exempt from charges. However, there are always a certain number of people just on the margin, who are just below entitlement for welfare benefits. They will suffer more than somewhat from the imposition of these charges. It is no good the Minister saying, as he did when my hon. Friend the Member for Oldham, West (Mr. Meacher) tackled him about dental charges that mean that it will be cheaper to have a tooth extracted than filled, that that has always been the case. That is not a justification for an extension of the practice. The right hon. and learned Gentleman knows as well as I do that there are already crooked dentists who are extracting and making fortunes. I have the figures, which have been given to me by the Minister and the Scottish Office, in parliamentary answers. This is only a minority, but some dentists make £200,000 gross and more because they are extracting teeth rather than filling them.
Although the British Dental Association has made representations to the Department of Health and Social Security asking the Department to remedy, alter, change or modify the system by which dentist are paid, which is the incentive for engaging is such malpractices, for one reason or another the right hon. and learned Gentleman has not moved to attempt to alter, modify or change that system. If the right hon. and learned Gentleman is looking for savings, there may be minimum savings by this means, but since he does not turn up his nose at saving a million or two in certain other ways, why does he not do so here?
The Opposition have asked questions many times in the House, as I did when I was on the Public Accounts Committee, about the extortionate profits that are made by the drugs companies. If the Government want to make real savings in the National Health Service the right hon. and

learned Gentleman ought to be much more ruthless about the drugs companies. I believe that he would like to be. He wants any savings that are made to be transferred to patient care. I believe that far greater savings could be obtained by tackling the drugs companies much more ruthlessly than the Government have done hitherto. Those savings would be far more dramatic than any savings that could be achieved by means of the regulations. I believe the right hon. and learned Gentleman knows that very well. Much more evidence is needed of the Government's determination to move in that direction. Regulations of this kind, which hit those who can ill afford to bear the burden, would not then have to be laid year after year.
If such regulations are considered in the context of the Chancellor's speech only a short time ago — about a low-wage economy and an increase in National Health Service charges—one sees that those on low incomes are continuously bearing all these burdens while people earning £20,000 and more have benefited from Budgets ever since 1979. Such regulations penalise those on low incomes. We are arguing about the basic injustice and unwisdom of it.
I do not know what a future Labour Government would do, but we agreed that the National Health Service is under-funded. Given the likely economic position of this country in three years' time, it will be very difficult to find additional revenue with which to finance the National Health Service. The Labour party set up the NHS in the face of fierce Tory opposition. We are determined as soon as possible to return to the fundamental principles upon which the NHS was based. This Government are willingly, deliberately, eagerly, moving away from that basic principle by imposing heavier and heavier charges and are seeking to excuse themselves by saying that the savings will be transferred to patient care.
I do not know by what method this House could control the direct transfer of such savings to patient care. There is no means by which the House could find that out. This is a smokescreen and the Minister knows that it is a smokescreen. We shall have no hesitation about going into the Lobby tonight to oppose these charges, because we know very will that it is not the end of a story that will continue to be extremely squalid until this Government come to an end.

Mrs. Edwina Currie: Once again we have had a collection of ritual words from Labour Members. It was particularly interesting to hear the hon. Member for Oldham, West (Mr. Meacher), because this time he made a right mess of it, did he not? He started off by saying that he would abolish charges for all. We would all like to abolish charges for everybody. It would be nice to have a free NHS. But it is worth remembering that national average earnings are approaching £200 a week and that would only benefit the best off in our society, including many hon. Members, who can perfectly well afford to pay for those aspects of their care for which the Government are charging them.
Then the hon. Gentleman said that we should tax sugar. Does he realise in just how many thousands of foodstuffs that people eat every day of the week sugar is found? It is found in bread, biscuits, soup, every kind of preservative and canned fruits, not just in food that is sweet. Sugar is a major preservative. I am not held back by any payment from the British Sugar Corporation. It is


in every item that we eat. Therefore, the hon. Gentleman is saying that he would be pleased to see us taxing food. He would be pleased to see us taxing the food that is particularly eaten by people who cannot afford a range of choice. We are against taxing food. We have said clearly that we are against any kind of VAT extension on food. He would like to tax food; clear note should be taken of that.
Thirdly, the hon. Gentleman has a major problem because he tried hard to have a go at the Government's spending on the NHS. Yet the Government's funding of the NHS in real terms and in money terms, their results, the number of patients treated, the ways in which they are treated, the general health of our society and all the other improvements that we have seen since 1979, show that the hon. Gentleman has a real problem on his hands. Therefore, I do not blame him for making a mess of the opposition to the Government on these issues.
Nobody likes charging for prescriptions. It would be nice to have a free NHS. As long as three quarters of the prescriptions go free, we cannot argue that the charges prevent abuse. I am on record as saying in the House this time last year and previously that the wrong people get free prescriptions. It is wrong that every woman in the country from the wealthiest to the poorest should receive free contraceptives when people dying of cancer have to pay for their prescriptions, whether they have pre-payment certificates or not. Once again, I urge my right hon. and learned Friend to put that anomaly right.
As long as the charge bears no direct relation to the cost, we are not telling people what their treatment costs. We have begun to put that right with dental charges, and I urge the Government to see whether we can make the cost of prescriptions relate to the cost of the drugs so that we can tell people that their drugs are expensive and that they will be charged a proportion of their cost, perhaps with a limit, so that they will begin to understand exactly what it costs to treat them.
The charges irritate people and they put some people off, but on the dental side there is no evidence that they put a lot of people off. The number of people receiving dental treatment is well up and we can take the charges in our stride. We must have the charges, because they raise £500 million a year. Without them, the NHS would be in trouble. That is a perfectly adequate reason for having them.
The attitude of Labour Members is opposition for the sake of it, When it comes to the NHS it is sheer humbug. They would not abolish the charges. They would "reduce them below £2". How generous. For how long? Where would they find the rest of the money to make up the income thereby lost to the NHS? They did it once and they brought them back immediately. Harold Wilson, now the noble Lord Wilson of Rievaulx, resigned from the Government in 1951 when charges were introduced and he abolished them when he became Prime Minister in 1965. He then reintroduced them, within a matter of months, in 1968. He was an Oxford graduate who read politics, philosophy and economics, as did many other hon. Members, and if he could not manage without prescription charges, we can be pretty sure that nobody could. I am sure that the hon. Member for Oldham, West could not. The

Opposition tried twice to have free prescriptions and they failed twice. They reintroduced those charges twice and they would do the same again.
The Opposition would create even more problems for the NHS, given half the chance, because they would abolish pay beds altogether. When I was responsible for the Queen Elizabeth hospital in Birmingham, which had a budget of about £15 million, £1 million of that was raised by the charges that we made for our pay beds. It was the Labour Government of the 1960s, under the then Secretary of State, Barbara Castle, who did their best to drive pay beds out of the NHS, and almost succeeded. But in reality they only drove private patients away from the NHS into private hospitals, and consequently the NHS lost a great deal of income that we are not likely to get back. We only lost income and the opportunity to treat our people in the way that they deserved.
To deny the NHS — as the Opposition would — the sum of £500 million, or something very close to that this year, would be to deny many people the opportunities for treatment that they now have. If we abolished charges, or even reduced them in the way that has been suggested, waiting lists would be increased, research would be diminished and capital programmes would be destroyed just as they were last time this was tried. The worst off among our people would lose the most.
The Opposition's approach to the whole NHS, and particularly to NHS charges, is one of empty oratory. I am glad to support the Government.

Mr. Charles Kennedy: The hon. Member for Derbyshire, South (Mrs. Currie) suggested that one genuine way out of this annual ritual over the increasing of prescription charges might be to relate the prescription charge to the cost or value of the drug. That might be one solution, but it does not commend itself to me, and I do not imagine that it would commend itself to other hon. Members either. We would then be making people pay according to the severity of their illnesses or according to how unlucky they had been in contracting a specific illness. Therefore, although I do not question the hon. Lady's motives in making that suggestion, I do not think it would commend itself to a Government.
The Minister's speech and that of the hon. Member for Oldham, West (Mr. Meacher) showed that statistics can be used to prove anything. The Minister has performed as one would expect a slick QC to perform, particularly in his deployment of the argument over the NHS drugs bill. In the past few weeks hon. Members have been told that the limited list is necessary and essential because we must reduce the number of prescriptions, and some of the excessive and unnecessary prescribing that goes on. But when it is pointed out that proposals for dental charges and increasing prescription charges may have a deterrent effect, he denies it and says that prescribing is increasing and that that is to be greatly welcomed. He uses the same piece of information to prove one argument one week and another, quite contradictory, argument the next week. I shall be interested to hear the Minister's response to that.
We have also heard that we could tackle the cause of dental problems by taxing sugar. The hon. Member for Derbyshire, South referred to the number of products containing sugar. To be fair, however, to the hon. Member for Oldham, West, I think that he was speaking


specifically about the 2 lb household bag of sugar. But that suggestion might commend itself if the Government guaranteed that the revenue raised would be pumped into preventive medicine, and into putting more emphasis on preventive education. That might be a plus factor for that suggestion, but I by no means endorse the suggestion as it stands.

Mrs. Currie: Does the hon. Gentleman realise that he is suggesting that it is perfectly all right to feed our children on convenience foods, but that he will tax good home baking?

Mr. Kennedy: With great respect, I think that the part of the country that I come from has more distinguished home baking—I think that even the Under-Secretary of State for Scotland who is responsible for health will agree with me about this—than most other areas. That is not a sensible interpretation of the remark.
We oppose the charges, but not because we deny that charges are a fundamental part of health finance. We do not deny that charges have to be increased. The Government should come clean and operate an annual uprating in line with the inflation rate. That is where we part company with Labour spokesmen. I do not know what price the Labour party would put on prescription charges if it were in power, but we favour increasing prescription charges automatically in line with inflation each year. That is fair.
Of course we should like to move towards scrapping prescription charges and towards reducing the burden which they impose, but we must be honest and realistic. We cannot abolish them because of their contribution to funding the Health Service.

Mr. Gerald Malone: From what base would the Alliance calculate prescription charges? If the base is similar to that proposed tonight, will the hon. Gentleman and his hon. Friends support the Government? If not, what is his base?

Mr. Kennedy: The base is 1979 when the Conservatives came to power and started the round of changes. That is a straightforward answer.
Let us not forget why the Government propose such a massive increase. It is not just that charges were frozen by the last Labour Government, but because the Secretary of State announced that he would save £100 million through the limited list. It was an inadequate list and now the still rosy and optimistic estimate is that £75 million will be saved by that means. A large part of the difference is accounted for by the charges announced in haste before the Budget and shortly after the revised limited list was agreed. That is neither a consistent nor fair way in which to decide NHS prescriptions.
The Minister said that increased dental charges did not appear to deter people from seeking dental treatment. The Government are well known for their faith in market forces. They must see the logic of continuing to increase charges. Ministers tell all Departments that if they do not make themselves commercially attractive customers will not place orders. If the Minister continues to place such a burden through dental charges the service will cease to be attractive, or attainable, and the take-up, which he claims is increasing, will begin to subside.
The optical services have almost been moved out of the NHS. Our worry is that if we proceed with such levels of

uprating — which are dictated more by short-term responses to Treasury demands than by a consistent policy for ploughing growing resources into the Health Service — we shall do immense damage. With my right hon. and hon. Friends I shall be joining the Labour Opposition in the Lobby to oppose the proposals.

Mr. Richard Hickmet: It is somewhat extraordinary that the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) should say that the Social Democratic party is in favour of prescription charges and will maintain them, yet, when asked at what level prescription charges will be maintained, he says at the 1979 level, plus the retail price index. That is a novel and extraordinary statement. If and when the disastrous day occurs when his party has power, how will he get back to the figures that he mentioned?
Prescription charges are designed to produce £500 million income for the NHS — about one third of the drugs bill. The debate has been about the cost of providing the drugs, the savings to be made and the increased income from raising charges. Therefore, it is legitimate to examine precisely towards what the costs, if we pass these regulations, patients in the limited categories affected will have to pay £2.
In my ignorance and innocence, I thought that we were talking about the costs of manufacture, research and development. But of the £12,069 million 1982 drugs bill, an astounding £182 million was accounted for by sales promotion, distribution and information. It is legitimate to ask how much of the £2 proposed charge will service promotional costs. In 1982, sales promotion accounted for £130 million. That is a quite unacceptable figure if we expect patients to pay £2 for their prescriptions. Of that £130 million, £60 million was spent on representatives. With respect to my right hon. and learned Friend the Minister for Health, according to a parliamentary answer last month he is unable to provide information about how representatives operating within the pharmaceutical price regulation scheme are paid or remunerated. If we expect people to pay £2 towards prescription costs, it must be legitimate to ask how that figure is made up. It is £60 million on representatives, £32 million on advertising, £17 million on literature and £12 million on information items, such as data sheets, material for medical symposia, and samples. Although the promotional costs have been reduced from 10 per cent. of the 1985 drugs bill to 9 per cent., they will still amount to £135 million.
I wish to make it clear that I believe that it is necessary to find the funds for which the Minister is asking to contribute towards those costs. However, it is not satisfactory that companies operating within the pharmaceutical price regulation scheme should get away with those expenses. If we are examining the charges to patients, we must similarly examine the costs of the drugs being supplied. Inasmuch as the cost of the drugs will be represented next year by £135 million of sales promotion — or 9 per cent. — and if we take into account distribution costs on which £60 million was spent in 1982 —and my right hon. and learned Friend does not have information on how that figure was made up—£200 million of the cost of the 1982 drugs bill of £1,300 million is represented by sales promotion, information items and distribution costs.
If we must increase prescription charges to £2 — regrettably, I accept that the increase is necessary—the time has come for the pharmaceutical price regulation scheme to be examined carefully. When I asked the Secretary of State how the items to which I referred were examined and what control existed, I was told in a parliamentary answer that the matter was controlled by an ad hoc formula. May we be told what sort of formula controls expenditure of £200 million? Whatever the formula, it cannot be satisfactory if it is conducted by an ad hoc method.
It is unacceptable that the NHS should have to pay for sales promotion, distribution and information amounting to almost 15 per cent. of the drugs bill, while at the same time we expect patients to pay £2 towards the cost of their prescriptions. There must be a cheaper way to disseminate information to doctors.
I shall support my right hon. and learned Friend tonight, but I urge him to accept that the time has come for a detailed examination of the PPRS, its operation and its cost to the NHS. It is a thoroughly bogus argument to say that research, development and investment in this country will be cut unless we take action of this nature, when such alarmingly high sums are spent to persuade gullible doctors to prescribe the most expensive drugs on the market.
On the subject of doctors and charges to private patients in NHS hospitals, is my right hon. and learned Friend satisfied that all such charges are being levied, that consultants are passing on information to the relevant authorities so that charges can be collected when patients are treated privately in hospital and that waiting lists are not kept artificially long as a result of pressure on consultants to perform private work? The time has come for a thorough review of the manner in which drugs in the NHS are costed.

Mr. Harry Ewing: The hon. Member for Glanford and Scunthorpe (Mr. Hickmet) expressed the fears, worries and doubts of hon. Members on both sides of the House about the advertising and distribution costs of the drug companies in relation to the NHS.
More important, he expressed the deep concern that is felt by many members of the public, for it is becoming obvious that a reason for the size of the drugs bill is the extent of the figures that the hon. Gentleman presented and the points made by my hon. Friend the Member for Fife, Central (Mr. Hamilton).
When Conservatives ask Opposition Members, whatever their party, what they would do to reduce prescription charges—at a time when the Government are increasing them to £2—they are insulting the sick. Whatever way the issue is considered, the increased charges are an extra tax on the sick. Any Government who would impose value added tax on the intimation of a death in the press are capable of imposing the tax that we are debating.
I shall explain to the hon. Member for Derbyshire, South (Mrs. Currie), the Minister and anyone else who wants to listen why prescription charges need not have risen on this occasion and previously since 1979 when the Government came to power and the prescription charge was 20p. We all remember how Hoffman La Roche had

to return millions of pounds to the NHS because it had been bleeding the service dry through overcharging it for the drugs that it was supplying. We remember vividly that millions of pounds had to be returned to the NHS because it was discovered that Hoffman La Roche — I suspect that other drug companies have been involved as well— were supplying a service and making—

Mr. Willie W. Hamilton: Extortionate profits.

Mr. Ewing: As my hon. Friend says, the company was making extortionate profits at the expense of the NHS and, directly, of sick people. There is undoubtedly widespread abuse of NHS facilities by private practice. The hon. Member for Glanford and Scunthorpe (Mr. Hickmet) referred to £159 million when talking about the advertising of products. If that sum were added to the money that Hoffman La Roche returned to the NHS and to the sums that would become available by clamping down on the widespread abuse of NHS facilities by those engaged in private practice, we would be able to fund this increase and every other one that the Government have imposed since coming into power in 1979.
We do not need lectures from Conservative Members on the difficulties of reducing prescription charges.

Mr. Malone: It is important that this issue is clarified. To what level does the hon. Gentleman think that the charges should be reduced? At least the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) was patently honest on this score. By my calculations, he was saying that his party would introduce charges of about 35p that would be based on the rate of inflation. Is that a figure that the hon. Member for Falkirk, East (Mr. Ewing) would accept? If not, what figure would he consider reasonable?

Mr. Ewing: The hon. Gentleman is not a lawyer cross-examining a witness now. It is for the Government to defend the £2 prescription charge, which is a tax on the sick. I invite the hon. Member for Aberdeen, South (Mr. Malone) to defend this tax on the sick at Aberdeen over the weekend. If he had listened slightly more carefully —he usually listens quite carefully—to my remarks, he would be aware that I explained that if the Government were to clamp down on the widespread abuse of NHS facilities by private practice, a significant contribution would be made to the move to reduce prescription charges.
The Government commissioned audits of health authorities in England and Wales, but we have not reached that stage in Scotland because of the complacency of the Under-Secretary of State for Scotland who is responsible for these matters. However, we shall come to that. There is evidence of abuse in Scotland as well, including one outstanding case that the Government refuse to do anything about. There is widespread abuse within the NHS as a result of private practice using NHS facilities. Nearly £200 million is spent—that sum has been mentioned by the hon. Member for Glanford and Scunthorpe — on advertising and distribution costs.
If the sums that I have mentioned had been brought together, it would not have been necessary to increase the charges. The 35p rate that the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) has talked about in using the formula laid down by the SDP causes me to have a funny feeling that it was thought out on the spur of the moment by the hon. Gentleman. Of course, that is typical of the SDP, the party of instant policy makers. I suspect


that the policy was framed at about five minutes to midnight. I have a funny feeling also that the SDP will live to regret the pronouncement of policy by the hon. Gentleman. We shall come to that in another debate.
Since 1979, there has been no need to increase prescription charges.

Mr. Jeremy Corbyn: Does my hon. Friend agree that one solution to the problems of NHS finances and the way in which prescription charges have increased would be to have a democratic, publicly owned and controlled drug industry? The NHS would not then be like a beggar at the doors of these multinational companies.

Mr. Deputy Speaker: Order. That may be, but it is outside the scope of the measure before the House.

Mr. Ewing: I am grateful to you, Mr. Deputy Speaker.
Figures published by the Government — the hon. Member for Derbyshire, South will be especially interested in them — show that 40 per cent. of prescriptions do not cost £2 an item, yet the Government still impose a charge of £2 an item on the person who is prescribed the medicine. That can only be described as a tax on sickness. The hon. Member for Derbyshire, South said that 70 per cent. of prescriptions were free. That may have been true before the restrictive drug list was introduced. It is certain that that 70 per cent. figure does not now stand examination. Four out of every five of the more than 1,800 items removed from the list of drugs available on prescription from the NHS were prescribed for people who did not pay for their medicine. These drugs are no longer available to doctors to prescribe on the NHS, and those four out of five people will have to buy their medicine across the counter.
I imagine that the percentage of prescriptions that are free is much lower than 70 per cent. Only time will tell whether the hon. Member for Derbyshire, South, who shakes her head in disagreement, is correct or whether I am correct in asserting that, because of the restrictive list, we have prevented many people from obtaining free medicine.

Mrs. Currie: The hon. Gentleman said that the £2 prescription charge is in some cases more than the cost of the item. That may well be true with regard to the cost of the drugs, but as one with an interest in this subject, in the sense that my family are retail pharamacists, I put it to the hon. Gentleman that somewhere along the line some one has to pay the pharmacist as well. A dispensing fee is involved.

Mr. Ewing: I have an interest in this matter as well, because many of my constituents are patients. My interest is only with my constituents, who are patients, and that is why I am arguing their case so forcefully.
I am the first to concede that one of the major improvements in health has been in the dental health of young children and teenagers. It is always a source of great pride to me when I look at young people with excellent teeth, because over the years it has been made relatively easy for them to pursue a course of dental treatment, either from an orthodontist or a dental practitioner. These charges will deter people, especially youngsters—there is no point in the Under-Secretary of State shaking his head — from going to dentists to obtain the treatment that will maintain the improvement in dental health which I am proud we have achieved.

Mr. Michael Shersby: Is the hon. Gentleman aware that 50 per cent. of children under the age of 12 in England are now caries-free, and that that is a result of better nutrition, better dental health and the use of fluoride? Therefore, there is no question of them being deterred.

Mr. Ewing: I do not want to digress into the argument about proper eating habits and all that is associated with it. I caution Government supporters about venturing into that debate, because it was the present Government who deliberately sank the report on proper eating habits at the request of the companies that were feeding money into the Tory party funds, the sales of which would have been affected if the proper eating habits report had been adopted by the Government. Therefore, that is not an advisable argument for Tory Members to follow. There is no doubt that as a result of the increase in the charges, dental health will suffer.
The quicker the Government tackle the problem of the dentist's contract, the better they will be able to come to grips with the abuses in dental practice. Ministers know the flaws and defects in that contract. They know that it is easy for a dentist to reduce his NHS output, and because he is on a net target income, he is paid the same net target income for doing less NHS work. Then he increases his private practice, which leads, as my hon. Friend the Member for Fife, Central said, to dentists earning £200,000 a year. Dentists deliberately reduce their NHS output, and while obtaining the same net target income from the NHS, increase private practice output and thus earn those massive sums. Ministers must have the will to tackle that problem.
The effect of the prescription charges will be devastating on patients. I do not know for the life of me how any right hon. or hon. Member can come to the House and seek to defend these substantial increases: this tax on the sick. The Government's unpopularity is now beginning to manifest itself. On Thursday last week the Secretary of State for Scotland had the ignominy of losing a regional seat in his constituency that has been a Tory seat for nearly 80 years. That is only the beginning. It will go on and on until the Government are removed from office and a Labour Government are returned to power, committed as we are to give a free and decent Health Service to the people.

Mr. Michael Shersby: The proposal by the hon. Member for Oldham, West (Mr. Meacher) to impose a tax on sugar as a means of ameliorating prescription charges is quite extraordinary. In making my speech, as always, I declare that I have an outside interest in the sugar industry. Therefore, I am interested to hear the hon. Gentleman attack constituents of his hon. Friends the Members for Greenock and Port Glasgow (Dr. Godman) and for Newham, South (Mr. Spearing) and apparently attempt to reverse the Labour party's policy by imposing a tax on sugar, which, if it were ever to be approved, would affect the price of every other food product on supermarket shelves. The hon. Gentleman is trying to turn the clock back to the days of Disraeli, who abolished the sugar tax.
Therefore, I hope that the hon. Gentleman will do his homework and that in future he will pay attention to the report of the panel that reported recently on diet and


cardiovascular disease, and made no recommendation for a reduction in sugar consumption. Therefore, his arguments are not well founded. They are merely parroting the cries for yet another tax burden on people who can ill afford to pay. The hon. Gentleman should think again before he talks about such taxation.
I should like to refer to the pharmaceutical industry and pick up the remarks of the hon. Member for Fife, Central (Mr. Hamilton), who was a member of the Public Accounts Committee. I am a member of that Committee at present. I remind the hon. Gentleman that the work that he and his colleagues set in hand when he was a member of that Committee, in using the pharmaceutical price regulations scheme to reduce the profit margin on pharmaceutical products, has been carried on by the present Committee. Profit margins on drugs are today even lower than they were when the hon. Gentleman was a member of that Committee.
The remedies thrown out by the Opposition today in their desperation to justify their extraordinary policies do not wash, and the hon. Member for Oldham, West had better do better in future debates.
It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).

The House divided: Ayes 179, Noes 268.

Division No.166]
[12.15 pm


AYES


Adams, Allen (Paisley N)
Corbyn, Jeremy


Alton, David
Cowans, Harry


Archer, Rt Hon Peter
Cox, Thomas (Tooting)


Ashley, Rt Hon Jack
Craigen, J. M.


Ashton, Joe
Crowther, Stan


Atkinson, N. (Tottenham)
Cunliffe, Lawrence


Bagier, Gordon A. T.
Cunningham, Dr John


Banks, Tony (Newham NW)
Davies, Rt Hon Denzil (L'lli)


Barnett, Guy
Davies, Ronald (Caerphilly)


Barron, Kevin
Davis, Terry (B'ham, H'ge H'l)


Beckett, Mrs Margaret
Deakins, Eric


Beith, A. J.
Dewar, Donald


Bell, Stuart
Dixon, Donald


Benn, Tony
Dobson, Frank


Bennett, A. (Dent'n &amp; Red'sh)
Dormand, Jack


Bermingham, Gerald
Dubs, Alfred


Bidwell, Sydney
Duffy. A. E. P.


Blair, Anthony
Dunwoody, Hon Mrs G.


Boyes, Roland
Eadie, Alex


Bray, Dr Jeremy
Eastham, Ken


Brown, Gordon (D'f'mline E)
Evans, John (St. Helens N)


Brown, Hugh D. (Provan)
Ewing, Harry


Brown, N. (N'c'tle-u-Tyne E)
Fatchett, Derek


Brown, R. (N'c'tle-u-Tyne N)
Field, Frank (Birkenhead)


Brown, Ron (E'burgh, Leith)
Fields, T. (L'pool Broad Gn)


Bruce, Malcolm
Fisher, Mark


Buchan, Norman
Flannery, Martin


Caborn, Richard
Foot, Rt Hon Michael


Callaghan, Jim (Heyw'd &amp; M)
Forrester, John


Campbell-Savours, Dale
Foster, Derek


Canavan, Dennis
Fraser, J. (Norwood)


Carlile, Alexander (Montg'y)
Freeson, Rt Hon Reginald


Cartwright, John
Garrett, W. E.


Clark, Dr David (S Shields)
Golding, John


Clarke, Thomas
Hamilton, James (M'well N)


Clay, Robert
Hamilton, W. W. (Central Fife)


Clwyd, Mrs Ann
Hancock, Mr. Michael


Cocks, Rt Hon M. (Bristol S.)
Harrison, Rt Hon Walter


Cohen, Harry
Hart, Rt Hon Dame Judith


Coleman, Donald
Healey, Rt Hon Denis


Concannon, Rt Hon J. D.
Hogg, N. (C'nauld &amp; Kilsyth)


Conlan, Bernard
Holland, Stuart (Vauxhall)





Home Robertson, John
Parry, Robert


Hoyle, Douglas
Patchett, Terry


Hughes, Robert (Aberdeen N)
Pendry, Tom


Hughes, Roy (Newport East)
Penhaligon, David


Hughes, Sean (Knowsley S)
Pike, Peter


Hughes, Simon (Southwark)
Powell, Raymond (Ogmore)


Janner, Hon Greville
Radice, Giles


John, Brynmor
Redmond, M.


Johnston, Russell
Rees, Rt Hon M. (Leeds S)


Jones, Barry (Alyn &amp; Deeside)
Richardson, Ms Jo


Kaufman, Rt Hon Gerald
Roberts, Allan (Bootle)


Kennedy, Charles
Roberts, Ernest (Hackney N)


Kilroy-Silk, Robert
Robinson, P. (Belfast E)


Kirkwood, Archy
Rogers, Allan


Lamond, James
Ross, Stephen (Isle of Wight)


Leadbitter, Ted
Rowlands, Ted


Leighton, Ronald
Ryman, John


Lewis, Ron (Carlisle)
Sheerman, Barry


Lewis, Terence (Worsley)
Sheldon, Rt Hon R.


Litherland, Robert
Shore, Rt Hon Peter


Lloyd, Tony (Stretford)
Short, Mrs R.(W'hampt'n NE)


Loyden, Edward
Silkin, Rt Hon J.


McCartney, Hugh
Skinner, Dennis


McCrea, Rev William
Smith, C.(Isl'ton S &amp; F'bury)


McDonald, Dr Oonagh
Smith, Cyril (Rochdale)


McNamara, Kevin
Smith, Rt Hon J. (M'kl'ds E)


McTaggart, Robert
Soley, Clive


McWilliam, John
Spearing, Nigel


Madden, Max
Steel, Rt Hon David


Marek, Dr John
Stewart, Rt Hon D. (W Isles)


Marshall, David (Shettleston)
Stott, Roger


Martin, Michael
Straw, Jack


Maxton, John
Thomas, Dr R. (Carmarthen)


Maynard, Miss Joan
Thorne, Stan (Preston)


Meacher, Michael
Tinn, James


Meadowcroft, Michael
Wallace, James


Michie, William
Wardell, Gareth (Gower)


Mikardo, Ian
Wareing, Robert


Millan, Rt Hon Bruce
Weetch, Ken


Miller, Dr M. S. (E Kilbride)
Williams, Rt Hon A.


Morris, Rt Hon A. (W'shawe)
Wilson, Gordon


Morris, Rt Hon J. (Aberavon)
Winnick, David


Nellist, David
Woodall, Alec


Oakes, Rt Hon Gordon
Wrigglesworth, Ian


O'Brien, William
Young, David (Bolton SE)


O'Neill, Martin



Orme, Rt Hon Stanley
Tellers for the Ayes:


Owen, Rt Hon Dr David
Mr. Frank Haynes and


Paisley, Rev Ian
Mr. Allen McKay.


Park, George



NOES


Aitken, Jonathan
Boyson, Dr Rhodes


Amess, David
Brandon-Bravo, Martin


Ancram, Michael
Bright, Graham


Arnold, Tom
Brinton, Tim


Ashby, David
Brooke, Hon Peter


Aspinwall, Jack
Brown, M. (Brigg &amp; Cl'thpes)


Atkins, Robert (South Ribble)
Browne, John


Atkinson, David (B'm'th E)
Bruinvels, Peter


Baker, Rt Hon K. (Mole Vall'y)
Bryan, Sir Paul


Baker, Nicholas (N Dorset)
Buck, Sir Antony


Baldry, Tony
Budgen, Nick


Banks, Robert (Harrogate)
Bulmer, Esmond


Batiste, Spencer
Burt, Alistair


Beaumont-Dark, Anthony
Butcher, John


Bellingham, Henry
Butler, Hon Adam


Bendall, Vivian
Butterfill, John


Benyon, William
Carlisle, John (N Luton)


Best, Keith
Carlisle, Kenneth (Lincoln)


Bevan, David Gilroy
Carlisle, Rt Hon M. (W'ton S)


Biggs-Davison, Sir John
Cash, William


Blackburn, John
Chalker, Mrs Lynda


Blaker, Rt Hon Sir Peter
Channon, Rt Hon Paul


Bonsor, Sir Nicholas
Chapman, Sydney


Boscawen, Hon Robert
Chope, Christopher


Bottomley, Peter
Clark, Hon A. (Plym'th S'n)


Bottomley, Mrs Virginia
Clark, Dr Michael (Rochford)


Bowden, A. (Brighton K'to'n)
Clark, Sir W. (Croydon S)


Bowden, Gerald (Dulwich)
Clarke, Rt Hon K. (Rushcliffe)






Clegg, Sir Walter
Haselhurst, Alan


Cockeram, Eric
Hawkins, C. (High Peak)


Colvin, Michael
Hawkins, Sir Paul (SW N'folk)


Coombs, Simon
Hawksley, Warren


Cope, John
Hayes, J.


Couchman, James
Hayward, Robert


Currie, Mrs Edwina
Heathcoat-Amory, David


Dickens, Geoffrey
Heddle, John


Dicks, Terry
Henderson, Barry


Dorrell, Stephen
Hickmet, Richard


Douglas-Hamilton, Lord J.
Hicks, Robert


Dover, Den
Hind, Kenneth


du Cann, Rt Hon Sir Edward
Hirst, Michael


Dunn, Robert
Hogg, Hon Douglas (Gr'th'm)


Durant, Tony
Holt, Richard


Dykes, Hugh
Hordern, Peter


Edwards, Rt Hon N. (P'broke)
Howard, Michael


Eggar, Tim
Howarth, Alan (Stratf'd-on-A)


Emery, Sir Peter
Howarth, Gerald (Cannock)


Evennett, David
Howell, Rt Hon D, (G'ldford)


Eyre, Sir Reginald
Howell, Ralph (N Norfolk)


Fallon, Michael
Hunt, David (Wirral)


Farr, Sir John
Hunt, John (Ravensbourne)


Favell, Anthony
Hunter, Andrew


Fenner, Mrs Peggy
Jessel, Toby


Finsberg, Sir Geoffrey
Johnson Smith, Sir Geoffrey


Forman, Nigel
Jones, Gwilym (Cardiff N)


Forsyth, Michael (Stirling)
Jones, Robert (W Herts)


Forth, Eric
Kellett-Bowman, Mrs Elaine


Fowler, Rt Hon Norman
Kershaw, Sir Anthony


Fox, Marcus
Key, Robert


Franks, Cecil
King, Roger (B'ham N'field)


Fraser, Peter (Angus East)
Knight, Gregory (Derby N)


Fry, Peter
Knight, Mrs Jill (Edgbaston)


Gale, Roger
Knox, David


Galley, Roy
Lang, Ian


Gardiner, George (Reigate)
Latham, Michael


Gardner, Sir Edward (Fylde)
Lawler, Geoffrey


Goodhart, Sir Philip
Lawrence, Ivan


Goodlad, Alastair
Lee, John (Pendle)


Gow, Ian
Lennox-Boyd, Hon Mark


Grant, Sir Anthony
Lester, Jim


Gregory, Conal
Lewis, Sir Kenneth (Stamf'd)


Griffiths, E. (B'y St Edm'ds)
Lilley, Peter


Griffiths, Peter (Portsm'th N)
Lloyd, Ian (Havant)


Ground, Patrick
Lord, Michael


Grylls, Michael
Luce, Richard


Gummer, John Selwyn
Lyell, Nicholas


Hamilton, Hon A. (Epsom)
McCrindle, Robert


Hamilton, Neil (Tatton)
McCurley, Mrs Anna


Hampson, Dr Keith
Macfarlane, Neil


Hanley, Jeremy
MacKay, Andrew (Berkshire)


Hannam, John
MacKay, John (Argyll &amp; Bute)


Hargreaves, Kenneth
Maclean, David John


Harris, David
McNair-Wilson, P. (New F'st)


Harvey, Robert
McQuarrie, Albert





Madel, David
Renton, Tim


Major, John
Rhodes James, Robert


Malins, Humfrey
Ridley, Rt Hon Nicholas


Malone, Gerald
Ridsdale, Sir Julian


Maples, John
Rifkind, Malcolm


Marland, Paul
Roberts, Wyn (Conwy)


Marlow, Antony
Roe, Mrs Marion


Mather, Carol
Sainsbury, Hon Timothy


Maude, Hon Francis
St. John-Stevas, Rt Hon N.


Mawhinney, Dr Brian
Shaw, Giles (Pudsey)


Mayhew, Sir Patrick
Shaw, Sir Michael (Scarb')


Mellor, David
Shepherd, Colin (Hereford)


Merchant, Piers
Shepherd, Richard (Aldridge)


Meyer, Sir Anthony
Shersby, Michael


Miller, Hal (B'grove)
Silvester, Fred


Mills, Iain (Meriden)
Sims, Roger


Mills, Sir Peter (West Devon)
Skeet, T. H. H.


Mitchell, David (NW Hants)
Smith, Sir Dudley (Warwick)


Moate, Roger
Spencer, Derek


Montgomery, Sir Fergus
Stevens, Lewis (Nuneaton)


Morris, M. (N'hampton, S)
Stevens, Martin (Fulham)


Morrison, Hon P. (Chester)
Stewart, Allan (Eastwood)


Moynihan, Hon C.
Stewart, Andrew (Sherwood)


Mudd, David
Stokes, John


Murphy, Christopher
Tebbit, Rt Hon Norman


Neale, Gerrard
Terlezki, Stefan


Needham, Richard
Thomas, Rt Hon Peter


Nelson, Anthony
Thompson, Donald (Calder V)


Neubert, Michael
Thompson, Patrick (N'ich N)


Newton, Tony
Thurnham, Peter


Nicholls, Patrick
Townsend, Cyril D. (B'heath)


Normanton, Tom
Trotter, Neville


Norris, Steven
Twinn, Dr Ian


Onslow, Cranley
Vaughan, Sir Gerard


Oppenheim, Phillip
Viggers, Peter


Osborn, Sir John
Waldegrave, Hon William


Ottaway, Richard
Walden, George


Page, Richard (Herts SW)
Wall, Sir Patrick


Parris, Matthew
Waller, Gary


Patten, Christopher (Bath)
Wardle, C. (Bexhill)


Patten, J. (Oxf W &amp; Abdgn)
Warren, Kenneth


Pattie, Geoffrey
Watson, John


Pawsey, James
Wells, Bowen (Hertford)


Percival, Rt Hon Sir Ian
Wheeler, John


Pollock, Alexander
Whitney, Raymond


Portillo, Michael
Wilkinson, John


Powell, William (Corby)
Wolfson, Mark


Powley, John
Young, Sir George (Acton)


Proctor, K. Harvey



Raffan, Keith
Tellers for the Noes:


Raison, Rt Hon Timothy
Mr. Peter Lloyd and


Rathbone, Tim
Mr. Tristan Garel-Jones.

Question accordingly negatived.

Orders of the Day — Mineworkers Pension Scheme

The Parliamentary Under-Secretary of State for Industry (Mr. David Hunt): I beg to move,
That the draft Mineworkers' Pension Scheme (Limit on Contributions) Order 1985, which was laid before this House on 11th March, be approved.
The order follows the standard form of earlier orders and concerns only those who left the coal industry before 6 April 1975. It continues the policy, established by the National Coal Board (Finance) Act 1976, whereby the costs of meeting a deficiency in the mineworkers' pension scheme fund resulting from the need to pay pensions to the many people who left the industry before 6 April 1975 is reimbursed through Government grant for the period up to 1995. Each year that the level of pensions is increased, higher deficiency contributions may be required by the fund. Under the Act, the Government may reimburse these to maintain the real level of those pensions if they are satisfied that the National Coal Board's finances do not permit it to take on the additional burden.
The long and damaging strike in the industry — happily now ended, but still casting its shadow—leaves the board in no position to do so. My right hon. Friend the Secretary of State for Energy has laid before the House a statement giving the reasons why he is satisfied that an increased contribution from the Government is justified. Therefore, I ask the House to approve the order.

Mr. Alexander Eadie: The House must be aware that some of the origins of the order lie in the statement that Mr. MacGregor made at the beginning of the industrial dispute, when he said that it was a little local difficulty outside town. It has been rather an expensive local difficulty. The Chancellor has just wound up the important Budget debate. He is the Minister who said that the dispute was a worthwhile investment. The order shows the price of that local difficulty and worthwhile investment.
Many of my hon. Friends, particularly those associated with the mining industry, understand the history of the order, which concerns the mineworkers' pension scheme. The scheme started off on a voluntary basis. As a local trade union official, I remember extolling to my fellow miners the virtue of having a pension when they were due for retirement. It was perhaps a sad commentary on the times that many of the miners were of the view that they would not live long enough to draw the pension.
It was right that the unions and the National Coal Board decided to make the miners' pension scheme compulsory, but it is a miserable pittance of a pension for many of my fellow miners who have spent 50 years in the industry.
Perhaps I should declare an interest. I am a member of the mineworkers' pension scheme. Having spent 30 years in the industry, most of it at the coal face, I shall get about 50p a week when I retire. My wife and I have not yet decided, when the time comes, whether we shall take it weekly, monthly or quarterly.
I do not cite this example as a diversion from the issues that we are discussing. I am just taking the opportunity to recall that when the pension scheme was set up on a voluntary basis, it provided for a small fixed pension in return for a flat rate contribution. Eventually, that resulted

in the introduction of the minimum pension level for men with 10 or more years' service, to which the Minister alluded, being uplifted to the current level of £11·81.
It was one of my more pleasurable moments, as the Minister responsible for the coal industry in 1975, to be associated with the introduction of an earnings-related scheme. I could not understand why miners, in every grade of the industry, should not have a superannuation scheme. I was there to assist in putting it right; and that meant that fortune was shining on me because of my association with the industry.
This point is not an aside, because it illustrates the miserable pittance of a pension provision that miners who retire under the miners' pension scheme have today, compared with what will happen with pension provision for those who retire with the superannuation scheme. That £11·81 after 50 years in the industry is a miserable recognition.
The Minister may be aware that it has been the policy of the NUM to seek the further uplifting of the minimum pension payable to men who retire between January 1952 and April 1975 who, in the majority of cases, have spent a lifetime in the service of the industry.
Last year the National Union of Mineworkers' conference called for the minimum pension to be increased to at least £20 instead of £11·81. I do not believe that that was an extravagant claim. The resolution also called for appropriate increases in widows' pensions. The basis for that claim was that the minimum pension now paid to the pioneers of the pension scheme is totally inadequate in relation to their loyal service to the industry. I ought to point out to the Government that this will not be a continuing financial burden. Some miners have already left us, and time will account for the rest.
The Opposition understand the purpose of the order and do not oppose it. However, I believe it is right to draw these points to the attention of the Government and I hope that they will receive favourable consideration.

Mr. Dennis Skinner: Before my hon. Friend sits down, could he deal with the strange anomaly that a miner upon retirement will be able to get his pension but that for some vindictive reason the regional adjudication officers now say that he cannot get the unemployment benefit to which he is entitled for the first 12 months? This Government have apparently given instructions to those who deal with unemployment benefit that, although miners can receive their pension, they are not to be given unemployment benefit because, even though the strike is over, there is still a trade dispute. A thousand and one anomalies spring to mind. A retired miner in my constituency has ended up with a massive shortfall because of Government intervention and their contention that the trade dispute is still in progress.

Mr. Eadie: I take the point raised by my hon. Friend. My intention was to deal with it in more detail next Thursday, and I shall do so. However, my hon. Friend is quite correct. There appears to be a spirit of spite and vindictiveness abroad after the resolution of this dispute and an organised return to work. I understand that it was an adjudicator in Manchester, who perhaps does not have enough work to do or who is acting on behalf of the Government, who decided, despite what has been said in the newspapers and on television and radio, that the mining dispute had not ended. Because of a legal quirk and


case law, he decided that he would not consider this industrial dispute ended until he received notification of its end from the National Coal Board. Last Friday I dealt with such cases. Many of my constituents who have given a lifetime of service to the industry discovered that they have been deprived of their unemployment benefit because this person in Manchester—with perhaps not enough to do, but perhaps in collusion with the Government and in a spirit of vindictiveness — has decided that miners cannot receive unemployment benefit until the National Coal Board reports by letter to him or to the appropriate quarter that the industrial dispute has ended.
There is another anomaly. I hope that the Minister can dispel the fears of Government collusion over the overtime ban. If that person in Manchester does not have enough to do and is seeking to argue that the industrial dispute in the mining industry is continuing because of the overtime ban, and if he thinks that it is possible in law to deprive miners who have sought and received redundancy pay of their unemployment benefit, he had better do his homework a little better.
The overtime ban was in force before the industrial dispute started. In scores of cases men who left the industry or were made redundant have received their unemployment benefit. I hope that the Government will not hang their hat on that peg. If they do, they will be made to look extremely foolish.
There needs to be reconciliation in the mining industry. I hope that the Government will be able to show that there is no spirit of vindictiveness and spite on their part and that this is the result of a foolish civil servant who does not have enough work to do. I hope that before Thursday the Minister will be able to dispel my anxieties and those of my hon. Friends.

Mr. Gerald Howarth: I, too, have constituents in a similar position to those of the hon. Members for Midlothian (Mr. Eadie) and for Bolsover (Mr. Skinner) who are concerned that they are not receiving unemployment benefit. But the hon. Member for Midlothian has not helped the House or the case by making such disparaging remarks about the tribunals which are looking into the matter. He should know that those are matters of law within the tribunal system and that they are trying to go through the process as expeditiously as possible. I understood that the case of one of my constituents had been decided in his favour. We are now awaiting a final decision, and I hope that that will come soon. Would it not be helpful if the president of the NUM, when he returns from Moscow — if he has a return ticket — having had his debriefing, were to say that the dispute is over and that the miners will get on with the business of returning the industry to profit?

Mr. Eadie: I am glad that I gave way to the hon. Gentleman because he has fallen flat on his face. He has sought to argue that what was done by a particular civil servant could be justified. He seeks to argue before the House that miners who retire after a period in the industry with redundancy benefit should be questioned and come under the strictures of law and be deprived of unemployment benefit, just because a civil servant decided that. If the hon. Gentleman wants properly to represent his constituents, he will have to do so in a more positive way than he has demonstrated to the House.
Perhaps he should have been a bit more condemnatory of a bureaucrat or of the Government depriving miners of their unemployment benefit.

Mr. Howarth: rose—

Mr. Eadie: Perhaps the hon. Gentleman will contain himself. He asked a question, and I am giving him the answer as I see it. He will find it very difficult to justify to his constituents why they should be deprived of their unemployment benefit. Yet that is what he has sought to do tonight.

Mr. Howarth: Will the hon. Gentleman give way?

Mr. Eadie: I shall not give way.

Mr. Howarth: rose—

Mr. Eadie: I shall not give way to the hon. Gentleman.

Mr. Howarth: The hon. Gentleman is scared.

Mr. Eadie: Judging by the hon. Gentleman's face, he is trembling at the faux pas he has made in daring to intervene in something that he knows nothing about.

Mr. Alec Woodall: Does my hon. Friend remember the issue that we raised a short time ago regarding the adjudicating officer who denied unemployment benefit to miners who had been put out of work? When an adjudicating officer in Yorkshire examined the case and came down in favour of those men, the chief adjudicator pointed out that he was out of step with other adjudicating officers. Thus, the chief adjudicator made the Yorkshire adjudicator change his mind. Is not that Government intervention?

Mr. Eadie: rose—

Mr. Deputy Speaker (Sir Paul Dean): Order Hon. Members are beginning to stray a little from the subject under debate, which is the mineworkers' pension scheme. It is in order to go a little wide, but hon. Members should not pursue the line of argument that is now being put forward.

Mr. Eadie: I suppose that I should accept some responsibility. I gave way quite a lot, but apparently not enough for some hon. Members.

Mr. Howarth: Will the hon. Gentleman give way?

Mr. Eadie: I have already given way once to the hon. Gentleman, and I shall not give way now.
We need more conciliation in the industry rather than obtuse legal tribunals, judgments, and so on. If the conciliation procedure was applied within the industry, we would not need to have recourse to such things. Miners should not be compelled to be subject to these independent tribunals. I make that point in all sincerity, because, if this is to be the future pattern for the industry, the industry will never see a period of reconciliation when the wounds can be healed. We want the industry to return as quickly as possible to producing, and we want the mining industry to expand rather than to contract. However, I fear that in some areas there may be announcements this week that there will be a contraction rather than an expansion of the industry. We would certainly slam the Government for that. I repeat that we should not be involved in legality and so on.
The opposition do not intend to oppose the order.

Mr. Gerald Howarth: I rise to speak simply because I fear that the hon. Member for Midlothian (Mr. Eadie) has sought to misrepresent my position.
I may go slightly wide of the order, but I should like briefly to put the record straight. I too have constituents who are in the same position as those of the hon. Member for Midlothian. My hon. Friend the Minister will know, as others of my hon. Friends know, that I have argued strongly in support of my constituents who accepted in good faith voluntary redundancy and the benefits of the redundant mineworkers payments scheme. They and I are upset that they have not been able to obtain the deal that we thought due to them. Therefore, I have argued strongly in support of my constituents, and will continue to do so. The point that I sought to make to the hon. Member for Midlothian was that these matters are governed by a series of laws going back, I understand, to 1911. They are not something dreamed up to deal with the recent dispute.
The tribunals are established to resolve difficult questions of law relating to individual industrial disputes. It is important to understand the role of tribunals and their adjudicating officers.
I have argued with the Lord Chancellor that cases should be speeded up. I shall continue to press the Government to do all that is possible to ensure that these matters are concluded speedily.
The hon. Member for Midlothian has not done the House a service by misrepresenting another hon. Member's position. He can read the Official Report to see what I said. He would do the House a favour if he described my position as it is.

Mr. Kevin Barron: The hon. Member for Cannock and Burntwood (Mr. Howarth) should look back two years to when there was no dispute in the mining industry. People who took voluntary early retirement collected unemployment benefit without any problems. Only in the last 12 months has a difficulty arisen. Tribunals should not make a negative decision in one case and a positive decision in another. That is unfair, but that has been happening since March 1984.
Three sentences in the second paragraph of the statement by the Secretary of State attached to the order could mislead right hon. and hon. Members. It states that for the majority of mineworkers pensions are now £11·81 a week. They went up by 5·1 per cent. last October. The statement says:
It is estimated that an increase to £1l ·77 per week would have been required to maintain the real value of these pensions as set in 1974.
All those receiving those pensions retired before 6 April 1975. Many of them are now single ex-miners or miners' widows. Since 1975 state and industrial pensions have been regarded as income for tax purposes. Many miners' widows in my constituency cannot understand why, when they are said to receive £11 a week mineworkers' widow's allowance, they receive only £2 or £3 because of tax. It would be wrong to think that we are talking about a handout from the Conservative Government. It is hard to explain to someone who is 85 why their pension has almost disappeared.
The Secretary of State for Energy says in his statement:

The strike did not in fact end until the beginning of March, and the outturn loss for the year is therefore likely to be rather higher.
The Secretary of State for Energy should tell the Secretary of State for Employment that the strike ended at the beginning of March because some miners in my constituency have been dismissed without appearing before a court of law. Their families are still being treated as if they were on strike. They have been told to appeal, but in some cases it is months before a date is fixed for the hearing.
It is grossly unfair that people should be told that they must live on supplementary benefit, less £16 a week, when they have been dismissed from the NCB. Such dual standards are disgraceful. Those who have been dismissed are being victimised. For many of my constituents the strike did not end at the beginning of March. Money which is rightly theirs is not being paid to them.

Mr. Dave Nellist: The preface to the order states that
The Secretary of State …having reviewed the overall financial position of the National Coal Board … have led him to conclude that the following Order should be made.
As my hon. Friend the Member for Rother Valley (Mr. Barron) said, the third paragraph refers to the continuing review of
the Board's finances … and the uncertainties generated by the strike in the industry.
Therefore, it is within the terms of the order to debate some of the wider issues of the financial position of the NCB—as we have done on previous orders.
The accounts include provisions for the payments mentioned, but also the general social costs of such matters as compensation for subsidence. I understand that that applies mainly to Mansfield.
Throughout the strike, the Secretary of State for Energy and his underlings have argued about the uneconomic nature of the NCB and the need to sack 20,000 miners and close 20 pits. The basis on which he calculated whether the NCB was profitable included costs that he has now admitted were incurred by people who retired 10 years ago. Social costs such as compensation for subsidence have nothing to do with the cost of producing coal—they are often the costs of not producing coal; of pits that closed 10, 20 or 30 years ago.

Mr. Allan Rogers: Does my hon. Friend agree that during a meeting Mr. Ian MacGregor of the NCB said that charges for subsidence would devolve upon the collieries or mines that incurred those costs? He said that the collieries in Nottinghamshire that had worked through the strike are those pits likely to close when the subsidence costs become too large.

Mr. Nellist: I fully accept that point.

Mr. Michael Morris: On a point of order, Mr. Deputy Speaker. I am having some difficulty in discovering what the hon. Gentleman's speech has to do with section 2(3) of the National Coal Board (Finance) Act 1976. I should be grateful for some guidance.

Mr. Deputy Speaker: The debate is primarily about mineworkers' pension schemes, but it is in order to refer to the general finances of the NCB.

Mr. Nellist: My hon. Friend the Member for Rhondda (Mr. Rogers) spoke about the costs of subsidence, and I


agree with him. After the closure of pits, those left will bear a higher burden under the current method of organising the profit and loss accounts of the NCB an will become more uneconomic because of costs outside their control.
Even if the Government decided to close every pit in the country, there would still be social costs — early retirement, pensions, sudsidence and so on. That was spotted during the strike by accountancy professors including, ironically, a professor from Manchester university who is sponsored by Price Waterhouse, the firm the Government sent to chase the miners' money around Europe, and such people as Dr. Andrew Glyn from Oxford university.
Given those criticisms, and the fact that the order shows that such matters are included in the accounts, has the Department looked at the way that the NCB's finances are organised and which items are included? Has the Secretary of State any proposals to bring before the House ways in which the NCB accounts could more accurately reflect the cost of producing coal, not including the costs of not producing coal currently in the accounts?
If that was done, and if the social costs, interest charges and so on were taken out of the accounts for Cortonwood —which is perfectly possible under other parts of Tory legislation in regard to privatisation — rather than making a £6·20 per tonne loss that pit would make £5·20 per tonne profit. Does the NCB intend to re-do its accounts on that basis?

Mr. Rob Hayward: The hon. Gentleman has spoken about the timescale involved in identifying subsidence costs. Is it not a fact—the hon. Member for Rother Valley (Mr. Barron) could confirm this—that that issue was discussed long before the strike and was considered by the Select Committee on Energy before the dispute began?

Mr. Deputy Speaker: Order. I said that it was in order to make some reference to general finances, but that such reference must be connected to the mineworkers' pension scheme.

Mr. Nellist: The finances of the NCB make it possible for pensions to be paid to miners. As I explained, the instrument gave the impression that the Department had considered the finances at various times in the last 12 months. I am questioning whether those finances have been considered sufficiently to justify what the Government are proposing.
The Chancellor said when introducing the Budget that the strike had cost about £2·5 billion. That was 10 times more than the Secretary of State for Energy hoped to save by the plan announced by MacGregor. We on the Labour Benches believe that the real cost was between £5 billion and £6 billion. Put in language of bricks and mortar, working people have paid for that dispute the equivalent of 60 large general hospitals, 360 comprehensive schools and over 100,000 new three-bedroom houses. That has been the cost of the 12-month dispute that the Government foisted on the National Union of Mineworkers, and last Tuesday the Chancellor described it as a worthwhile investment.
We should be told more about the financial implications of the companies that supply equipment and machinery to the NCB. An analysis of the profit and loss accounts of those firms in the last few years would show in mirror

image terms that when the NCB declared a loss of £200 million to £400 million, those companies together declared profits of £200 million to £400 million. In the last 12 months, workers in the industry have learnt that lesson. They will be demanding of the next Labour Government that those companies be taken into public ownership so that proper planning can take place.
A final cost of the strike must be taken into account. That is the cost of there being no social peace in the mining communities. Apart from the 750 miners who were sacked during the dispute, 11 in my area, many have been downgraded—from, say, face to surface work—as part of the NCB's victimisation policies.
The dispute is not over. The emphasis has changed. The miners are back at work, but the guerrilla war goes on. The social tensions in the pits will have financial implications for the industry. Think of the cost to the NCB of no allowing those 750 men to return to the pits to work with their mates.
As the result of a decision that we on these Benches made last week, Labour Members will continue financially to support those sacked miners to the tune of at least £12 a week because we believe that they have been the victims of Tory policies in the past 12 months. It is all very well for Tories to moan and grumble but they should cast their minds back to the murders that took place under the Smith regime in Rhodesia. Amnesties were granted to those who were guilty of some of the most heinous crimes recorded in history. However, the Tories still refuse to grant an amnesty to those who defended and stood by trade union policy over the past 12 months.
The strike will continue — well, the dispute will continue. Over the past 12 months the miners' struggle has given heart to millions of workers who equally oppose the Government's actions. The Prime Minister thought that it would be a three or four-week dispute. It was thought that it would not cost the coal board or the Government much. The right hon. Lady treated it as an industrial Falklands. She sent in the police equivalent of 2 Para, who were sent in at Goose Green. She thought that it would be an equally short dispute but she was proved wrong, particularly by the youth and the women in the coalfield areas.
It is beholden on the House to re-examine the way in which the Government view the coal board's finances, including the items that they incorporate in the finances when they declare that the board has made a loss. I have described the way in which a new generation of Socialists have been created in the coalfield areas. Young men and women have been brought into industrial and political activity for the first time because of the Government's actions. They are starting to learn the lessons of Socialism. They know now what proper nationalisation and proper public ownership must mean under the next Labour Government. That will not be the sort of public ownership that we have seen under the Tories, and it will not embrace the way in which they have run the coal board's accounts.

Mr. Spencer Batiste: After the contribution of the hon. Member for Coventry, South-East (Mr. Nellist), I wish to return briefly to the subject matter of the debate.
In the weeks shortly before the commencement of the strike, many of my constituents, accepted terms for early retirement in good faith. They were given a clear definition of the package that they were being offered by the board. The strike intervened during the period of notice


and as a consequence—I accept that the Department of Energy has taken all the necessary steps to deal with its involvement in the package—some of my constituents and the constituents of some of my hon. Friends have not received the money to which they believe themselves to be entitled.
I understand the complexities of the legal situation and the problems and the history of employment law, but it seems that we faced a simple issue. A group of people had promises made to them by the NCB about the package that they could reasonably expect if they accepted early retirement. Having accepted early retirement, however the legal problems may be resolved, we would surely expect them to receive their entitlement.

Mr. David Hunt: The hon. Member for Bolsover (Mr. Skinner) talked about entitlement to unemployment benefit and the hon. Members for Rother Valley (Mr. Barron) and for Coventry, South-East (Mr. Nellist) added their comments. The hon. Member for Midlothian (Mr. Eadie) asked about claims for unemployment benefit, I can tell him that they will be decided by independent adjudication. The adjudicators are specially appointed under the Social Security Act and the Government have no power to intervene.
As soon as the difficulty to which the hon. Member for Midlothian referred became apparent in the Department of Energy, my right hon. Friend the Secretary of State moved swiftly to amend the redundant mineworkers payments scheme last November. There was a great deal of pressure from my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth), as well as my hon. Friends the Members for Sherwood (Mr. Stewart) and for Elmet (Mr. Batiste) and many other of my hon. Friends and Labour Members, to ensure that those who found themselves disqualified from receiving unemployment benefit for the duration of the dispute by virtue of section 19(1) of the Social Security Act 1975 would not in addition lose the RMPS basic weekly benefit or pension supplement. We responded to that pressure.
In direct response to my hon. Friend the Member for Elmet, I say clearly that I sympathise considerably with the men who took voluntary redundancy after being counselled in good faith, as my hon. Friend the Member for Cannock and Burntwood has said, that in addition to their statutory redundancy benefits and the benefit available under the RMPS they would receive unemployment benefit, and who now find themselves disqualified from that benefit. I understand that an appeal is due to be heard on 16 April by a tribunal of commissioners and that their decision will be binding in similar cases. I shall carefully monitor the position.
The task is made much more difficult by speeches such as the one from the hon. Member for Coventry, South-East (Mr. Nellist) who declared, "The strike will continue," but then said, "The dispute will continue." If only the hon. Gentleman would keep quiet—I shall not say "shut up", because it is not the time of night to be rude to him—it would be easier for the NUM to persuade the independent adjudication officers that the dispute is over.

Mr. Allen McKay: I am sure that the hon. Gentleman has looked at the Act. If

he has not, perhaps he will. If my memory serves me correctly, the word "dispute" is not mentioned. The word "stoppage" is mentioned, and the stoppage is over.

Mr. Hunt: I understand that, under section 19(1) of the Social Security Act 1975, entitlement cannot be established until normal working has resumed at the redundant miner's former place of employment. In certain collieries, there is no doubt that normal working is being hindered by the NUM prolonging the dispute through the imposition of the continuing overtime ban. This is a matter not for the Government but for the independent adjudication authorities. It is a matter that finds more relevance in the debate we shall have on Thursday, when I have no doubt we shall discuss it in more detail.

Mr. Barron: One of the five coal faces at a colliery in Maltby in my constituency is now ready for production, but work has been prevented by the management. Presumably, there would be earnings under the incentives scheme if that mine were in production and the other coal faces were not because they were getting over the problems of the past 12 months. The NCB is stopping normal work at that colliery. That has far-reaching consequences not only for redundant miners but for miners who have been dismissed by the coal board but can receive either unemployment benefit or full supplementary benefit for themselves and their families.

Mr. Hunt: This is the first time that I have heard that accusation, and I shall look into it most carefully.

Mr. Woodall: Is the hon. Gentleman aware, when warning my hon. Friend the Member for Coventry, South-East (Mr. Nellist) about keeping quite so that the dispute will end, that there was a stoppage and, as my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) said, the stoppage has finished? Is the hon. Gentleman aware that two of my constituents have been dismissed by the colliery manager? Striking miners who went back to work before the strike ended have accused those men of using foul language about them. One of those men was dismissed today. It is all very well for the Under-Secretary of State to tell us to tread softly, softly; we want an amnesty. The hon. Gentleman should have a word with the coal board about its attitude towards the dispute.

Mr. Hunt: I said that it is difficult to persuade, and for members of the NUM to persuade, the independent adjudication officers that the dispute is over when the hon. Member for Coventry, South-East says that the dispute is not over. I shall, of course, investigate any case if the hon. Member for Hemsworth (Mr. Woodall) gives me details.
However, dismissals are a matter for the NCB and it is up to the NCB to look at each case—I understand that it is willing to do this—in a spirit of reconciliation and conciliation. The task is made more difficult by the NUM still refusing to re-enter normal conciliation procedures. This matter does not really come under this order.
The hon. Member for Midlothian referred to this pension as a "miserable pittance of a pension". I remind him that the Labour Government set the original pension at £3.60 a week. I cannot respond to the hon. Gentleman — not because I do not want to or because I am not sympathetic but because the right hon. Member for Chesterfield (Mr. Benn) made it impossible for me to respond by stating that the Government had no real power to increase the level of this pension beyond the limit


necessary to bring it into line with its real value as originally set. If the hon. Gentleman will read section 2(2) of the National Coal Board (Finance) Act 1976, he will realise that I am specifically prevented by the actions of his right hon. Friend the Member for Chesterfield and the Labour Government at that time from doing what he was asking me to do.

Mr. Eadie: I am not disputing what the Minister says. I know that he has been advised from the Box. On reflection, I think that he will understand the origin of the mineworkers pension scheme in 1952, and what could and could not be done. It is a bit thick to tell us that measures inaugurated in 1976 by my right hon. Friend the Member for Chesterfield (Mr. Benn) prevent him from acting.

Mr. Hunt: Without taking that matter too far, what I am saying is that in April 1975—as the hon. Gentleman knows, because he introduced it — the mineworkers' pension scheme was revised and became an earnings-related, self-financing scheme covering men employed in the industry at that date, and also future employees. It was at that moment that the rate was set at £3·60 a week. I am explaining to the House that, under the existing legislation, I am prevented from doing anything other than uprating that pension in line with inflation. That is a fact. Of course, I shall bear in mind and consider carefully the points that he made.
I should like to conclude by referring to the points raised by the hon. Members for Midlothian and for Coventry, South-East about the cost of the strike. The sad fact is that the NCB's finances are so bad that it is necessary to introduce the order. That is a fact. I have no proposals to alter the present accountancy system. Once again we are seeing the inadequate finances of the coal board when faced with the tremendous on-cost of uneconomic pits. Until that tremendous burden is lifted from the industry, the coal board itself will not be able to finance the sort of money that I am talking about.

Mr. Nellist: The Minister says that the coal board's finances are so bad that that is the reason for the order. It is for only £2·14 million, so one can hardly blame the finances of the coal board. I asked the Minister specific questions about the social and other costs included in the coal board's accounts, which anyone can get from the Vote Office. The Secretary of State and other Ministers in the Department refer to the coal board itself being uneconomic. The figures are given for the loss that is made. Included within that are payments for such things

as compensation for subsidence, early retirement and so on, which are all social costs, not costs of producing coal, and may apply to miners who left the industry 10 years ago. Those cannot be the responsibility of this generation of miners.

Mr. Hunt: I do not think that I can persuade the hon. Gentleman, other than by putting this fact to him. In the accounts to which he referred there is a loss of £1·3 billion in 1983–84. If the hon. Gentleman is trying to tell the House that that is not a sign that the coal board is unable, for instance, to meet the cost of the order, and, indeed, a whole range of other orders, he is missing the full point behind those accounts, which demonstrate time and again that, if the root cause of the dispute, which was the absurd demand that uneconomic pits should never be allowed to close, had been conceded, that would have meant a deficit increasing from £1·3 billion to many billions of pounds a year. That is just the prescription for financial inadequacy over the whole range of NCB activities that I should have thought hon. Members on both sides of the House would want to avoid.

Mr. Rogers: I do not object to the Minister putting the case for the order, but I wish that he would not try to rewrite the history of the strike in making his case. It would be much better if he confined himself to the order.

Mr. Hunt: I am now being criticised for responding to the debate. Perhaps the hon. Gentleman will have a word with his hon. Friend the Member for Coventry, South-East, who should not have raised these matters in the first place.
Scargill's strike has cost this great industry dear in human and financial terms. To have conceded that irresponsible demand would have cost the country more. However, this is a time for reconciliation, and I hope that Opposition Members will use their influence on all sides in this great industry to put the strike well behind all concerned, to return to proper procedures of conciliation and to start restoring the industry to the great level that existed at the start of this tragic dispute. The Government's commitment is to a viable and competitive coal industry. That commitment is as strong today as it ever has been.

Question put and agreed to.

Resolved,
That the draft Mineworkers' Pension Scheme (Limit on Contributions) Order 1985, which was laid before this House on 11th March, be approved.

Orders of the Day — Nurses and Midwives (Pay)

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Major.]

Mr. Allan Rogers: It will be interesting to speak in a debate in which Arthur Scargill cannot be blamed. I am pleased that we have with us the Minister for Health, on whose shoulders the blame for this travesty of justice can squarely be put.
I applied for this debate because of the anxiety in the National Health Service and the country about the Government's niggardly, mean and spiteful approach to the settlement of the nurses' and midwives' application for a pay increase. The Government's response is yet another example of their reneging on promises and sliding and twisting out of their responsibilities.
The 500,000 nursing staff in the NHS play a vital role in that service. Their dedication, good will and service to the community are widely recognised. It is a skilled, demanding and responsible job, which requires high personal commitment. Because of their commitment and dedication, however, they are the workers most vulnerable to an unscrupulous Government. If the nurses and auxiliary nurses took industrial action in pursuit of their claim, the whole Government propaganda machine would come into action, with the Prime Minister posturing on television saying that nurses were putting patients at risk.
It is the Minister and the Prime Minister who are putting patients at risk with their deceitful actions. I use the word "deceitful" advisedly, as it is the worst form of deceit to tell nurses and midwives that they deserve realistic pay levels, to set up a pay review body to deliver that promise and then to turn round and tell them that they must pay for their pay increases by accepting reductions in the standards of care for the patients they look after. If an independent body set up by the Government says that nurses deserve far more than a 3 per cent. pay increase this year, the Government should fund it. It is an act of criminal negligence to NHS patients and an abdication of responsibility to set up the pay review body and then to ask nurses, midwives and patients to fund a pay increase.
Staffing levels and the level of care for patients should be determined by the demand put on the Health Service. Pay rates are independent of those factors. Hence, the funding of all awards made by the Government-established pay review body should be treated as a separate matter. To link them is unfair, inequitable and deceitful. Affordability is a political, not an economic, decision. Money to fund what the Government believe to be politically important has been found in the past — examples are too numerous to mention.
The NHS and its staff are essential if we are to have a healthy and economically productive nation. The political will and commitment should be there to fund fair levels of pay determined by an independent body set up by the Government to assess fair levels of pay. The Government's attitude is mean, spiteful and niggardly towards a group of workers in the NHS who cannot adequately defend themselves.

Mr. D. N. Campbell-Savours: I congratulate my hon. Friend the Member for Rhondda (Mr. Rogers) on initiating the debate, because it gives us

an opportunity to discuss a matter of great anxiety to our constituents. The treatment of National Health Service staff generally has been outrageous.
At the general election in 1979 the Government set certain objectives. The first was to reduce the rate of auxiliaries' pay by threatening privatisation with its reduced pay and conditions. The second was to reduce the comparative position of professional nurses and midwives against that of other groups, such as the police, the military and many in the private sector. I am sure that the Minister will wish to address himself to that when he replies. The third was to apply cash limits with such vigour as to force health authorities, which implement nationally agreed settlements that exceed the cash limit increase, to cut their budgets and reduce services and patient care. That is certainly the position this year. The Treasury stated clearly in November 1984 that there would be an overall increase in the NHS budget of 5·5 per cent. for 1985–86. Provision for pay is 3 per cent. and for additional staff 2 per cent. on the pay bill. Taken together, pay and non-pay elements come to 5·;5 per cent. across the board. The Treasury made it clear that, if pay increases exceeded 3 per cent., the extra money would have to come from money allocated for providing more staff and/or improvements in services. What is the value of the 3 per cent. offer? With predictions of an increase in inflation to 6 per cent., 3 per cent. must mean a cut in real pay.
To turn to the immediate issue of the nurses' and midwives' claim, which is covered by the pay board review and which represents more than one third of all health authority costs, if the Government keep to their proposed change in policy of keeping to their cash limits and refuse to fund pay awards above the 3 per cent. cash limit for the NHS, it will have dramatic implications for nurses' and midwives' pay.
The professions have become increasingly suspicious of the Government's motives. Those suspicions were reinforced by the fact that the Minister led the team which gave evidence to the pay review board—obviously to enable him to stress the Government's cash considerations. When the Minister attended those discussions, he placed not the case for the value and contribution of nurses and midwives but exclusively the Government case in securing their cash limit objectives. Yet the profession wants only an objective, fair, independent and realistic assessment of its position. That is why the pay board was set up. It is an act of criminal negligence of the users of the NHS and a complete abdication of all responsibility to set up a pay review board with clear terms of reference based on independence and then to ask nurses, midwives, patients and auxiliaris to fund increases when they exceed Govenment cash limit increases.
When the Minister replies to the debate and tells us that it is important that the Government keep to those cash limits because they do not have the money, I hope that he will address his mind equally to areas where the Government have managed to find the money. Nurses, midwives and ancillary workers should know that, although this year the NHS is costing £17,000 million—the additional amount that we believe should be allocated in this offer is substantially less than that—in two and a half years the Falklands war has cost £2,400 million to secure the future of 1,600 people in the south Atlantic. Furthermore, when the Government were confronted with the need to make a £250 million economy in the National Coal Board, they spent — on their own admission —


£2,500 million to secure that benefit. In the view of some, they may have spent as much as £5,000 million or £6,000 million. Equally, in this Budget, they are cutting capital transfer tax, capital gains tax and other forms of taxation where the beneficiaries will be exclusively the better off in society. Yet, at the same time, they repeat their view that they must keep to the cash limits, and they refuse to pay what we believe is a small increase when one measures the worth of NHS workers.
I hope that, when the Minister replies, he will set out clearly the Government's priorities. Are they to ensure that National Health Service workers are reasonably and fairly remunerated for the contribution that they make to Britain? Does he believe that that is the priority, or does he believe that the Government should persist in handing over large sums of money to small groups of people, and expending their resources on matters that could and should have been avoided, if only the real public interest had been pursued?

The Minister for Health (Mr. Kenneth Clarke): First, may I congratulate the hon. Member for Rhondda (Mr. Rogers) on raising this important and serious subject. The hon. Gentleman usually enjoys, as far as I can tell, rude good health, but I realise that this evening he is not as well as he usually is. Therefore, I congratulate him on making the effort to get here at 1.30 am to discuss nurses' and midwives' pay, a subject on which he obviously feels strongly. He received strong support from the hon. Member for Workington (Mr. Campbell-Savours).
This is not the right moment to consider in great depth the merits of this year's pay claim on behalf of nurses and midwives, because we still await the advice of the independent review body. As the hon. Member for Workington said, I gave evidence on behalf of the Government to the review body, because its advice is of considerable importance to us and to the National Health Service and its development during the next 12 months. All those with responsibilities in this matter — the Government, the health authorities and the review body which advises us—must ensure that we deal fairly with key and dedicated workers in the Health Service. But at the same time we must ensure that resources are available for the development of patient services.
What I shall say now is that the Government have an extremely respectable record on nurses' pay. It is important that the House recognises that. Since 1979, nurses' basic pay rates have increased on average by 94 per cent. That is 26 per cent. more than the increase in prices during the same period. In addition to increasing the pay rates, the Government found the necessary resources — it cost about £116 million— in 1980–81 to reduce nurses' 'working hours from 40 to 37·5 a week, without any loss of pay to the nurses. That was equivalent to a further increase of 6·5 per cent. on basic pay. As well as giving pay increases to the staff, the numbers of nursing and midwifery staff in the NHS have increased steadily during the period of office of the Government.
We estimate that in England, an extra 39,500 whole-time equivalent staff in these grades were employed between September 1979 and September 1984, of which 24,000 were additional staff necessary to maintain services following the reduction in hours, and the remainder were additional staff for service developments. Those figures

speak for themselves, and show the increase in the pay of nurses and midwives, and the increase to numbers in service.
Most important of our actions, we set up the independent review body to advise us on future pay. We did so because the nurses and midwives did not go on strike in the Health Service strike. It is important that those who do not go on strike are dealt with fairly vis-á-vis those who do take industrial action, such as teachers, miners and others.
The Labour party, to which both the hon. Member for Rhondda and the hon. Member for Workington belong, supported the Health Service strike which continued into its last months because the TUC affiliated unions would not accept that we should make what they called a differential offer, offering a larger percentage increase to nurses and midwives than to their members, who had gone on strike against the patients. Therefore, the Government have an excellent record vis-á-vis the nurses on pay and numbers, and giving them a review body because of their dedication to their patients.

Mr. Campbell-Savours: Why has the pay of the military and the police risen more than the pay of the nurses since 1979? Is the contribution of those groups greater or less than that of others?

Mr. Clarke: The pay of those groups has risen more because their pay fell behind during the period of the Labour Government, because they were not affiliated to the TUC. The hon. Member knows that he is using two unrepresentative groups for an unrepresentative period to make the comparison. The pay of nurses compares well with inflation during our period of office and with the pay of most other groups.

Mr. Dennis Canavan: Does the right hon. and learned Gentleman remember the Halsbury committee report, which was implemented by the Labour Government over a decade ago? That gave the nurses and other Health Service staff the greatest increase—30 per cent. — that they had ever received. How can the Minister justify a position in which a policeman can go along to a picket line and bash people over the head, and is paid more than twice as much as the poor nurse who has to pick up the bloody battered pieces of the person who lands up in hospital as a result of the policeman's violence? If the Government can find the money to give the police a pay rise, why can they not find the money to give the nurses and the midwives an equivalent pay rise?

Mr. Clarke: I do not think that the average nurse would welcome the hon. Member's use of the police as a contribution to the argument for his or her claim for a pay rise. I have just explained that nurses' pay rates have gone up substantially ahead of inflation during the Government's period of office, and nurses are among the groups of staff that have done well while we have been in office.
The hon. Gentleman spoke of Halsbury in relation to the claim. This is not the stage to argue the merits of the claim, because we do not know what the review body will recommend. When it has produced its recommendations, we shall discuss what we shall pay nurses this year. The staff side has based its claim on Halsbury. As its bid to the review body, the staff side has put in a claim for just over


20 per cent. for various grades of the staff. That will cost £650 million and is based on the belief that it would take them all back to the Halsbury level set in 1974.
Such an approach to setting pay should be obsolete. We cannot return to it, first because double figure pay settlements have to be a thing of the past if we are to maintain the low inflation that is necessary as part of the means for restoring our economy.

Mr. Canavan: What about the police?

Mr. Clarke: The police will not get a 20 per cent. pay increase this year.
The idea that a particular professional group chooses one year in which it believes that it achieved a level of pay vis-á-vis other people to which they are automatically entitled to return is a fallacy. Every group chooses a different year. For the nurses it is 1974, for the doctors 1975, while the police will choose current years. Teachers go back to Houghton—I forget what year that was—and Members of Parliament could no doubt choose their favourite year. If historic levels of pay are gone back to and a professional group insists that it is always entitled to go back to that position in the league table, there will be the leapfrogging in pay rises which in the past led to hyper-inflation.

Mr. Rogers: The right hon. and learned Gentleman mentioned that nurses' pay has improved dramatically since 1979. May I refer briefly to the summary of the staff side evidence presented to him:
We focus on the low level of nurses', midwives' and health visitors' pay.
We show that the shortfall in earnings between nurses and other professional workers is around 20%.
We show that increases of between 15% and 22% would be needed for the main grades to restore the purchasing power of the Clegg award made in 1979.
We show that 38·5% of nurses and midwives earn less than £101 per week".
To achieve the low pay figure of £110 per week, which is the supplementary benefit equivalent for a two-child family of £115, staff nurses would need a 6 per cent. pay increase and enrolled nurses a 17·7 per cent. increase. In view of these figures, will not the right hon. and learned Gentleman accept that nurses have a very strong claim? This is the evidence not of a raving Left-wing union but of the Royal College of Nursing. This is what it feels about the right hon. and learned Gentleman's pay award.

Mr. Clarke: I know that that is the evidence of the Royal College of Nursing. The Government's respect for the college is demonstrated by the fact that we set up an independent review body to advise us on pay, largely because it is part of the constitution of the Royal College of Nursing that its members do not take strike action. The fact is that the Opposition preferred to support unions which took strike action against patients three years ago. This Government are in a much better position to speak as the friend of the Royal College of Nursing and of those nurses who belong to professional bodies. I have already said that it is not a useful guide in pay determination to take one year as setting a level which determines what is to be aspired to thereafter for each professional group. It leads to each professional group leapfrogging over one another. It is as foolish for the teachers to cling to their favourite year as it is for the nurses and other professional bodies to cling to theirs.
I shall not deal in detail with the evidence. However, one has to work through the figures without knowing whether one is talking about qualified nurses or unqualified nurses, or about student, full-time or part-time nurses. Without arguing about all the comparisons read out by the hon. Member for Rhondda from the evidence, I do not believe that comparisons that are necessarily selective because they are seen to be convenient to the claimant are the only or even the main determinant of pay. A crucial determinant of pay must be the need to deal fairly with one's staff and also the need to recruit and retain staff of adequate quality. That we are doing. There is no difficulty about recruitment.

Mr. Ted Rowlands: What about the recruitment of midwives?

Mr. Clarke: The recruitment of midwives is an important matter. The recruitment of midwives, for reasons which I do not altogether appreciate, is remarkably patchy. In some places it is difficult for midwives to get jobs, while in others it is difficult to recruit midwives. It is very difficult to match up the trained people with the jobs. Furthermore, about 50 per cent. of those who train as midwives do not practise as midwives. They prefer to go back into general nursing.
A crucial determinant of pay must be the availability of resources. That is not some new hardline cash limit discovery made by the Government, as the hon. Member for Workington implied heavily and emotionally throughout his speech. It is true in every major service and industry. One cannot set pay levels without regard to the level of resources available to pay the staff, certainly not when there are almost 500,000 staff.

Mr. Campbell-Savours: If the pay review board were to recommend a settlement of something more than 3 per cent., would the Government, even at this late stage, say that there might be some flexibility in their position and that they might make a contribution towards that settlement?

Mr. Clarke: I shall come to that in a moment. Let me try, without interruption, to answer the hon. Gentleman's points. He cannot keep on interrupting a flow of argument by asking a new question, as he is doing.
The hon. Gentleman asked me about the way in which we made resources available to finance the NHS, including the pay of all its staff, this year. That is an important question. Therefore, I shall not spend my time reminding him of the background to the issue. We have already doubled cash spending on the NHS. It has gone up by one fifth over and above that achieved by the previous Labour Government.
In 1985–86 we have made available an extra £500 million to health authorities in England alone. That is 5·5 per cent.—

Mr. Canavan: What about Scotland?

Mr. Clarke: An Adjournment debate on Scottish affairs would probably be a more relevant time to give those figures.
A 5·5 per cent. cash increase for the NHS is a substantial increase, over and above any current estimate of inflation for the year. It is also the most that we consider that the country can afford. It shows the Government's determination to increase spending on the NHS at a time when the totality of public spending is being restrained. It


is not the only source of new resources for the NHS. That 5·5 per cent. cash increase is new money. The NHS will also be able to carry through its cost improvement programmes, increase efficiency and improve the cost-effectiveness with which it delivers services. Health authorities generated £100 million-worth of new resources last year alone doing that.
That is the source of money and resources from which the health authorities must, firstly, finance pay settlements, and, secondly, finance service developments. That is the kind of reality within which anybody must work when operating any major service industry. The maximum resources likely to be available must be worked out and out of those resources every bill must be met, including the pay of the staff, which is most important in a service where 70 per cent. of the costs are pay, and the development of the service.
It is true that this year we have made the matter more explicit than in the past. Last year we based the cash allocation to the health authorities on artificial pay norms set for the purpose of public sector financial planning by the Government. When they proved to be way out of line with Health Service settlements, the contingency fund had to be looked to for a contribution towards settling the award. That was unsatisfactory from everybody's point of view in the NHS and did not give anybody a clear guide about where we stood.
This time we have decided the maximum cash available to the NHS—5·5 per cent. It is not based, as the hon. Member for Workington said, on any 3 per cent. pay factor. That has not been applied to the NHS. There is a 5·5 per cent. cash increase, out of which we must meet all our bills, including any increases in pay.
The result is that all we are doing is facing everybody—Government, health authorities, staff and review body

—with the reality that there is a relationship between pay and service provision. Were the pay bill for all groups of staff to go up by, say, 3 per cent. we would have a substantial amount of new resources for growth over and above anything the health authorities are expecting and it would enable them to develop the service even faster than they are doing.
On the other hand, if the pay bill goes up dramatically ahead of inflation and if the total pay bill were to go up by something of the order of 6 per cent. or more, it would wipe out all scope for the expansion of the service. Therefore, I hope that everyone will recognise the need to get the balance right and to come up with sensible recommendations and conclusions.
We now have to wait for the report of the nurses and midwives' review body. We have given evidence and so has the staff side. It is too late now to speculate about the content. It remains as independent as ever. We remain committed to implementing the review body's recommendations unless there are compelling reasons not to do so. Common sense is likely to prevail on all sides.

Mr. Canavan: Sit down.

Mr. Clarke: I trust that we shall get a sensible recommendation from the review body and that we shall be seen in the end to have dealt fairly with our staff and the service. If the Scottish matter is debated, I trust that it will be debated in a slightly more civilised fashion. Thanks to the Government's invention of the review body, these matters are debated in a civilised and reasoned way which is fair to a civilised and dedicated part of the NHS—our nurses and midwives.

Question put and agreed to.

Adjourned accordingly at ten minutes to Two o'clock.